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     <TD align=center width="99%" colSpan=7><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=5>SECURITIES AND EXCHANGE COMMISSION</FONT></B> </TD></TR>
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     <TD align=center width="99%" colSpan=7><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>Washington, D.C. 20549</FONT></B> </TD></TR>
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     <TD align=center width="99%" colSpan=7><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=5>FORM 8-K</FONT></B> </TD></TR>
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     <TD width="99%" colSpan=7>&nbsp; </TD></TR>
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     <TD align=center width="99%" colSpan=7><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">CURRENT REPORT</FONT></B> </TD></TR>
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     <TD width="99%" colSpan=7>&nbsp; </TD></TR>
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     <TD align=center width="99%" colSpan=7><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Pursuant to Section 13 or 15(d) of the</FONT></B> </TD></TR>
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     <TD align=center width="99%" colSpan=7><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Securities Exchange Act of 1934</FONT></B> </TD></TR>
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     <TD align=center width="99%" colSpan=7><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">Date of Report: </FONT><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">February 9, 2009</FONT></B> </TD></TR>
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     <TD align=center width="99%" colSpan=7><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">(Date of earliest event reported)</FONT> </TD></TR>
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     <TD align=center width="99%" colSpan=7><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=5>PRINCIPAL FINANCIAL GROUP, INC.</FONT></B> </TD></TR>
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     <TD align=center width="99%" colSpan=7><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">(Exact name of registrant as specified in its charter)</FONT> </TD></TR>
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     <TD noWrap align=center width="30%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>Delaware</FONT></B>&nbsp; </TD>
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     <TD noWrap align=center width="28%">&nbsp;<B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>1-16725</FONT></B>&nbsp; </TD>
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     <TD noWrap align=center width="30%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>42-1520346</FONT></B>&nbsp; </TD></TR>
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     <TD noWrap align=center width="30%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(State or other jurisdiction</FONT>&nbsp; </TD>
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     <TD noWrap align=left width="28%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(Commission file number)</FONT>&nbsp; </TD>
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     <TD noWrap align=center width="30%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(I.R.S. Employer</FONT>&nbsp; </TD></TR>
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     <TD noWrap align=center width="30%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>of incorporation)</FONT>&nbsp; </TD>
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     <TD noWrap align=center width="30%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Identification Number)</FONT>&nbsp; </TD></TR>
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     <TD align=center width="99%" colSpan=7><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>711 High Street, Des Moines, Iowa 50392</FONT></B> </TD></TR>
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     <TD align=center width="99%" colSpan=7><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(Address of principal executive offices)</FONT> </TD></TR>
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     <TD align=center width="99%" colSpan=7><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>(515) 247-5111</FONT></B> </TD></TR>
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     <TD noWrap align=left width="99%" colSpan=7><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the</FONT>&nbsp; </TD></TR>
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     <TD noWrap align=left width="67%" colSpan=5><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>registrant under any of the following provisions:</FONT>&nbsp; </TD>
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     <TD noWrap align=left width="5%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>[&nbsp;&nbsp;&nbsp; ]</FONT>&nbsp; </TD>
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     <TD noWrap align=left width="92%" colSpan=5><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</FONT>&nbsp; </TD></TR>
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     <TD noWrap align=left width="5%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>[&nbsp;&nbsp;&nbsp; ]</FONT>&nbsp; </TD>
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     <TD noWrap align=left width="92%" colSpan=5><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</FONT>&nbsp; </TD></TR>
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     <TD noWrap align=left width="5%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>[&nbsp;&nbsp; &nbsp;]</FONT>&nbsp; </TD>
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     <TD noWrap align=left width="92%" colSpan=5><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR</FONT>&nbsp; </TD></TR>
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     <TD noWrap align=left width="30%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>240.14d-2(b))</FONT>&nbsp; </TD>
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     <TD noWrap align=left width="5%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>[&nbsp;&nbsp;&nbsp; ]</FONT>&nbsp; </TD>
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     <TD noWrap align=left width="92%" colSpan=5><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR</FONT>&nbsp; </TD></TR>
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     <TD noWrap align=left width="30%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>240.13e-4(c))</FONT>&nbsp; </TD>
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     <TD noWrap align=left width="49%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=1>Page 2</FONT><FONT size=1>&nbsp; </FONT></TD>
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     <TD noWrap align=left width="99%" colSpan=3><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Item 2.02. Results of Operations and Financial Condition</FONT></B>&nbsp; </TD></TR>
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     <TD noWrap align=left width="99%" colSpan=3><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">On February 9, 2009, Principal Financial Group, Inc. publicly announced information regarding its <FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">results of operations and financial condition for <FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">the quarter </FONT></FONT></FONT></TD></TR>
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     <TD noWrap align=left width="99%" colSpan=3><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">ended December 31, 2008.&nbsp; The text of</FONT>&nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">the announcement is included herewith as Exhibit 99.</FONT>&nbsp; </TD></TR>
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     <TD noWrap align=left width="49%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Item 9.01 Financial Statements and Exhibits</FONT></B>&nbsp; </TD>
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     <TD noWrap align=left width="49%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">99 Fourth Quarter 2008 Earnings Release</FONT>&nbsp; </TD>
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     <TD align=center width="99%" colSpan=3><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">SIGNATURE</FONT> </TD></TR>
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     <TD noWrap align=left width="99%" colSpan=3><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">Prsuant 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 </FONT></TD></TR>
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     <TD noWrap align=left width="99%" colSpan=3><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">undersigned thereunto duly authorized.</FONT>&nbsp; </TD></TR>
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     <TD noWrap align=left width="99%" colSpan=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">PRINCIPAL FINANCIAL GROUP, INC.</FONT>&nbsp; </TD></TR>
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     <TD noWrap align=left width="49%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New &#13;&#10;Roman,Times,serif">By:</FONT>&nbsp; </TD>
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     <TD noWrap align=left width="48%"><U><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">/s/ </FONT></U><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif"><U>Terrance J. Lillis</U></FONT><U>&nbsp; </U></TD></TR>
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     <TD noWrap align=left width="99%" colSpan=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">Name: Terrance J. Lillis</FONT>&nbsp; </TD></TR>
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     <TD noWrap align=left width="99%" colSpan=3>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">Title:&nbsp;&nbsp;&nbsp; Senior Vice President and Chief Financial</FONT>&nbsp; </TD></TR>
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     <TD noWrap align=left width="48%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">Officer</FONT>&nbsp; </TD></TR>
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     <TD noWrap align=left width="49%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">Date: February 10, 2009</FONT>&nbsp; </TD>
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<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif"><FONT size=1>Page 3&nbsp;&nbsp;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></P>
<P align=right><B>EXHIBIT 99</B></P>
<P align=left><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>EXHIBIT </FONT></B><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>RELEASE</FONT></B><B><I><FONT face="TimesNewRomanPS-BoldItalicMT,Times New Roman,Times,serif" size=2>: </FONT></I></B><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>On receipt Final at 02/09/2009 11:46 AM</FONT></P>
<P align=left><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>MEDIA CONTACT: </FONT></B><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Jeff Rader, 515-247-7883,&nbsp;rader.jeff@principal.com</FONT></P>
<P align=left><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>INVESTOR RELATIONS CONTACT</FONT></B><I><FONT face="TimesNewRomanPS-ItalicMT,Times New Roman,Times,serif" size=2>: </FONT></I><FONT face="TimesNewRomanPSMT,Times New &#13;&#10;Roman,Times,serif" size=2>Tom Graf, 515-235-9500, investor-relations@principal.com</FONT></P>
<P align=center><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>PRINCIPAL FINANCIAL GROUP, INC. REPORTS FULL YEAR AND FOURTH QUARTER 2008 RESULTS</FONT></B></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Des Moines, IA (February 9, 2009) &#150; Principal Financial Group, Inc. (NYSE: PFG) today announced results for full year and fourth quarter 2008. The company reported net income available to common stockholders of $425.1 million, or $1.63 per diluted share for the twelve months ended December 31, 2008, compared to $827.3 million, or $3.09 per diluted share for the twelve months ended December 31, 2007. The company reported operating earnings of $942.7 million for 2008, compared to $1,052.7 million for 2007. Operating earnings per share (EPS) for 2008 were $3.61 compared to $3.93 for 2007. Operating revenues for 2008 were $10,725.1 million compared to $11,219.7 million for 2007.</FONT><SUP><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>1</FONT></SUP></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>For the three months ended December 31, 2008 the company reported a net loss available to common stockholders of $7.5 million or $0.03 per diluted share compared to net income available to common stockholders of $34.1 million, or $0.13 per diluted share for the three months ended December 31, 2007. The company reported operating earnings of $179.0 million for fourth quarter 2008, compared to $228.2 million for fourth quarter 2007. EPS for fourth quarter 2008 was $0.69 compared to $0.87 for the same period in 2007. Operating revenues for fourth quarter 2008 were $2,526.9 million compared to $2,899.1 million for the same period last year. Assets under management were $247.0 billion as of December 31, 2008 compared to $311.1 billion as of December 31, 2007.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>&#147;Given the difficult business environment, The Principal delivered very solid operating results for the fourth quarter and the year, demonstrating the value of revenue and earnings diversification, and strong business fundamentals,&#148; said Larry Zimpleman, president and chief executive officer. &#147;In addition, we continued to focus on effectively managing risks in a challenging market by building on our liquidity position and focusing capital on our longer-term growth opportunities.&#148;</FONT></P>
<P align=left><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>Highlights:</FONT></B></P>
<P align=left><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>Value of Diversification</FONT></B></P>
<P align=left><FONT face="SymbolMT,Times New Roman,Times,serif" size=2>&#183; </FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Life and Health earnings improved $49.3 million, or 22 percent in 2008 to $270.4 million, driving a 250 basis point improvement in segment return on equity.</FONT></P>
<P align=left><FONT face="SymbolMT,Times New Roman,Times,serif" size=2>&#183; </FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Principal International earnings improved $15.6 million, or 14 percent in 2008, to a record $126.3 million.</FONT></P>
<P align=left><FONT face="SymbolMT,Times New Roman,Times,serif" size=2>&#183; </FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Despite a 21 percent drop in assets under management in 2008 due to market conditions, 2008 operating revenues declined only 4 percent compared to 2007, on the strength of record revenues for the Global Asset Management and International Asset Management and Accumulation segments.</FONT></P>
<P align=left><SUP><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=1>1 </FONT></SUP><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=1>Use of non-GAAP financial measures is discussed in this release after Segment Highlights.</FONT></P>
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<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=1>Page 4</FONT></P>
<P align=left><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>Strong Fundamentals</FONT></B></P>
<P align=left><FONT face="SymbolMT,Times New Roman,Times,serif" size=2>&#183; </FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Maintained outstanding sales of the company&#146;s three key retirement and investment products despite a difficult sales environment, with $21.1 billion of sales on a combined basis in 2008, compared to a record $21.7 billion for 2007. This includes fourth quarter 2008 sales of $2.1 billion for Full Service Accumulation, $1.8 billion for Principal Funds and $0.7 billion for Individual Annuities.</FONT></P>
<P align=left><FONT face="SymbolMT,Times New Roman,Times,serif" size=2>&#183; </FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Record net cash flows in 2008 of $5.5 billion for Full Service Accumulation and $2.8 billion for Individual Annuities, an increase from 2007 of 17 percent and 38 percent, respectively, reflecting excellent sales and retention.</FONT></P>
<P align=left><FONT face="SymbolMT,Times New Roman,Times,serif" size=2>&#183; </FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Strong expense management, with total company operating expenses down $63.5 million, or 8 percent compared to fourth quarter 2007.</FONT></P>
<P align=left><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>Financial Strength and Risk Management</FONT></B></P>
<P align=left><FONT face="SymbolMT,Times New Roman,Times,serif" size=2>&#183; </FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Increased cash and cash equivalent holdings by 94 percent from a year ago to $2.6 billion at December 31, 2008.</FONT></P>
<P align=left><FONT face="SymbolMT,Times New Roman,Times,serif" size=2>&#183; </FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Eliminated the company&#146;s modest general account securities lending program.</FONT></P>
<P align=left><FONT face="SymbolMT,Times New Roman,Times,serif" size=2>&#183; </FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Continued to limit the size of the variable annuities with guaranteed living benefits business, minimizing the impact of equity markets on life company capital ratios.</FONT></P>
<P align=left><FONT face="SymbolMT,Times New Roman,Times,serif" size=2>&#183; </FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Reduced loan inventory in the company&#146;s commercial mortgage securities issuance operation from $1.7 billion at the beginning of 2008 to $20 million at year-end.</FONT></P>
<P align=left><FONT face="SymbolMT,Times New Roman,Times,serif" size=2>&#183; </FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Began scaling back the Investment Only block, adding to the company&#146;s capital cushion, and as part of longer-term focus on redeploying capital into higher growth businesses.</FONT></P>
<P align=left><FONT face="SymbolMT,Times New Roman,Times,serif" size=2>&#183; </FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>The company estimates approximately $800 million of excess capital</FONT><SUP><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>2 </FONT></SUP><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>as of December 31, 2008, and an NAIC RBC ratio of between 420 and 445 percent.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>&#147;While uncertainty remains around the length and severity of the global recession, we enter 2009 with a strong and proven business model,&#148; said Zimpleman. &#147;Deposits into our three asset management and accumulation segments</FONT><SUP><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>3 </FONT></SUP><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>were a record $112 billion in 2008. Principal Global Investors&#146; relative investment performance remains strong, and we continue to attract third party assets. And Full Service Accumulation began 2009 with its largest retirement plan win on record, providing </FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>defined contribution and nonqualified plan services </FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>to Community Health Systems, the largest publicly traded hospital company in the U.S. With some 80,000 participants and $1.4 billion in assets, this win is further evidence of the competitive advantage we have with Total Retirement Suite </FONT><SUP><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>SM</FONT></SUP><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>.&#148;</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Added Zimpleman: &#147;In 2009, we&#146;ll continue working to address the challenges the market presents. We believe The Principal will emerge even stronger: by maintaining our risk management focus; by balancing expense discipline with the need to invest in growth; and importantly, by staying true to its mission &#150; to help growing businesses, individuals and institutional clients achieve financial security and success.&#148;</FONT></P>
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<P align=left><SUP><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=1>2 </FONT></SUP><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=1>The company defines excess capital as the combination of debt capacity, cash at the holding company, and capital at the life company above what is required to maintain Principal Life&#146;s current credit rating.</FONT></P>
<P align=left><SUP><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=1>3 </FONT></SUP><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=1>Combined results from the U.S. Asset Accumulation and International Asset Management and Accumulation segments, and non-affiliated results from the Global Asset Management segment.</FONT></P>
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<P align=left><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>Net Income (Loss)</FONT></B></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Net income available to common stockholders of $425.1 million for 2008 reflects net realized capital losses of $505.3 million, which includes: $267.2 million of losses related to sales and permanent impairment of fixed maturity securities (including $58.1 million related to Lehman Brothers Holdings and $45.3 million related to Washington Mutual); $68.0 million of net losses related to hedging activities; $41.6 million of losses on mark to market of equity securities held as trading; $40.1 million of losses on mark to market of fixed maturity securities held as trading; $35.3 million of losses on mark to market of seed money investments; and $30.1 million of impairments on equity securities (including $6.5 million related to Lehman Brothers Holdings). Net income also includes a $12.3 million net loss from other after-tax adjustments, including a $28.1 million loss due to termination of the commercial mortgage securities issuance operation.</FONT></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>The net loss available to common stockholders of $7.5 million for fourth quarter 2008 reflects net realized capital losses of $188.9 million, which includes: $102.3 million of losses related to sales and permanent impairment of fixed maturity securities; $29.3 million of losses on mark to market of equity securities held as trading; $17.6 million of losses on bridge and mezzanine loans held in Principal Global Investors&#146; spread business; and $14.2 million of losses on mark to market of seed money investments. The net loss also includes a $2.4 million net gain from other after-tax adjustments.</FONT></P>
<P align=center><B><I><FONT face="TimesNewRomanPS-BoldItalicMT,Times New Roman,Times,serif" size=2>Segment Highlights</FONT></I></B></P>
<P align=left><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>U.S. Asset Accumulation</FONT></B></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Segment operating earnings for fourth quarter 2008 were $102.8 million, compared to $149.9 million for the same period in 2007. The decline primarily reflects the impact of significant equity market declines during fourth quarter 2008 and over the trailing twelve month period. Full service accumulation earnings were $54.3 million for fourth quarter 2008, compared to $82.1 million in fourth quarter 2007, reflecting a 16 percent decline in average account values. Individual annuities reported a $0.1 million operating loss in the fourth quarter 2008 compared to earnings of $15.1 million for fourth quarter 2007, primarily due to: unfavorable equity markets, which resulted in a true-up of variable annuity deferred policy acquisition costs during fourth quarter 2008, which reduced earnings by $11.6 million; and an increase in guaranteed minimum death benefit reserves</FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">, </FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>which reduced earnings by $4.1 million</FONT><FONT face="TimesNewRomanPSMT,Times New &#13;&#10;Roman,Times,serif">. </FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Principal Funds&#146; earnings were $2.0 million for fourth quarter 2008, compared to $11.3 million in fourth quarter 2007, reflecting a 29 percent decline in average account values.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Operating revenues for the fourth quarter were $1,100.5 million, compared to $1,300.3 million for the same period in 2007. The decline primarily reflects lower single premium group annuity sales in the full service payout business. The single premium group annuity product, which is typically used to fund defined benefit plan terminations, tends to vary from period to period. The decline also reflects lower fees in the full service accumulation and mutual fund businesses resulting from the negative impact of markets on account values.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Segment assets under management were $139.1 billion as of December 31, 2008, compared to $178.1 billion as of December 31, 2007.</FONT></P>
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<P align=left><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>Global Asset Management</FONT></B></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Segment operating earnings for fourth quarter 2008 were $27.0 million compared to $29.8 million in the prior year quarter. Higher earnings from performance incentives in fourth quarter 2008 were more than offset by the impact of lower average assets under management and lower fees due to a slowdown in the real estate market.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Operating revenues for fourth quarter increased to a record $173.5 million compared to $171.4 million for the same period in 2007.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Third party assets under management for the segment were $70.3 billion as of December 31, 2008, compared to $87.4 billion as of December 31, 2007.</FONT></P>
<P align=left><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>International Asset Management and Accumulation</FONT></B></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Segment operating earnings for fourth quarter 2008 were $18.4 million, compared to $25.4 million for the same period in 2007. The decline was primarily due to: weakening of Latin American currencies relative to the U.S. dollar, which reduced fourth quarter 2008 earnings by $6.5 million when compared to the same period a year ago; and interest rate related write-downs of government bonds of $3.3 million after-tax in Brazil included in operating earnings under equity method accounting. Both periods benefited by $3.8 million after-tax from higher yields on invested assets in Chile due to unusually high inflation. Fourth quarter 2007 earnings included a $5.6 million tax charge, due to new tax regulations in Mexico.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Operating revenues were $148.6 million for fourth quarter 2008, compared to $255.4 million for the same period last year. The decrease was primarily due to weakening of Latin American currencies relative to the U.S. dollar and lower sales of single premium group annuities in Chile.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Assets under management for the segment were $23.1 billion as of December 31, 2008, compared to $28.7 billion as of December 31, 2007, with $5.0 billion of the decline attributable to foreign currency.</FONT></P>
<P align=left><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>Life and Health Insurance</FONT></B></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Segment operating earnings for fourth quarter 2008 were $50.6 million, compared to $42.1 million for the same period in 2007. Individual Life earnings were $29.6 million for fourth quarter 2008 compared to $26.0 million for the same period in 2007, reflecting growth in the block of business overall, and $2.9 million of additional earnings from updating the policyholder dividend scale to reflect experience of the closed block. Reflecting claim seasonality in higher deductible plans, the Health division had an operating loss of $5.6 million in fourth quarter 2008. This compares to an operating loss of $9.4 million for the same period in 2007, with improvement primarily due to lower loss ratios. Specialty Benefits earnings were $26.6 million for fourth quarter 2008 compared to $25.5 million for the same period in 2007, as favorable claims experience was partially offset by lower investment income.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Operating revenues were $1,154.9 million for fourth quarter 2008, compared to $1,221.6 million for the same period in 2007. The decline was primarily due to a $56.4 million drop in Health division revenues, which primarily reflects a decline in covered members.</FONT></P>
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<B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>Corporate</FONT></B></TD></TR></TABLE></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Operating losses for fourth quarter 2008 were $19.8 million, compared to operating losses of $19.0 million for the same period in 2007. Results for Corporate primarily reflect interest expense on company debt and payment of the preferred stock dividend.</FONT></P>
<P align=left><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>Use of Non-GAAP Financial Measures</FONT></B></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>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&#146;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 measures at the end of the release. The company adjusts U.S. GAAP measures for items not directly related to ongoing operations. However, it is possible these adjusting items have occurred in the past and could recur in future reporting periods. Management also uses non-GAAP measures for goal setting, as a basis for determining employee and senior management awards and compensation, and evaluating performance on a basis comparable to that used by investors and securities analysts.</FONT></P>
<P align=left><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>Forward looking and cautionary statements</FONT></B></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>This press release contains forward-looking statements, including, without limitation, statements as to operating earnings, net income available to common stockholders, net cash flows, realized and unrealized losses, capital and liquidity positions, sales and earnings trends, and management's beliefs, expectations, goals and opinions. The company does not undertake to update or revise these statements, which are based on a number of assumptions concerning future conditions that may ultimately prove to be inaccurate.</FONT></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Future events and their effects on the company may not be those anticipated, and actual results may differ materially from the results anticipated in these forward-looking statements. The risks, uncertainties and factors that could cause or contribute to such material differences are discussed in the company's annual report on Form 10-K for the year ended December 31, 2007, and in the company&#146;s quarterly report on Form 10-Q for the quarter ended September 30, 2008, filed by the company with the Securities and Exchange Commission, as updated or supplemented from time to time in subsequent filings. These risks and uncertainties include, without limitation: adverse capital and credit market conditions that may significantly affect the company&#146;s ability to meet liquidity needs, access to capital and cost of capital; difficult conditions in the global capital markets and the general economy, which the company does not expect to improve in the near future, that may materially adversely affect the company&#146;s business and results of operations; the actions of the U.S. government, Federal Reserve and other governmental and regulatory bodies for purposes of stabilizing the financial markets might not achieve the intended effect; the risk from acquiring new businesses, which could result in the impairment of goodwill and/or intangible assets recognized at the time of acquisition; impairment of other financial institutions that could adversely affect the company; investment risks which may diminish the value of the company&#146;s invested assets and the investment returns credited to customers, which could reduce sales, revenues, assets under management and net income; requirements to post collateral or make payments related to declines in market value of specified assets may adversely affect company liquidity and expose the company to counterparty credit risk; changes in laws, regulations or accounting standards that may reduce company profitability; fluctuations in foreign currency exchange rates that could reduce company profitability; Principal Financial Group, Inc.&#146;s primary reliance, as a holding company, on dividends from its subsidiaries to meet debt payment obligations and regulatory restrictions on the ability of subsidiaries to pay such dividends; competitive factors; volatility of financial markets; decrease in ratings; interest rate changes; inability to attract and retain sales representatives; international business risks; a pandemic, terrorist attack or other catastrophic event; and default of the company&#146;s re-insurers.</FONT></P>
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<B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>Earnings Conference Call</FONT></B></TD></TR></TABLE></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>On Tuesday, February 10, 2009 at 10:00 A.M. (ET), President and Chief Executive Officer Larry Zimpleman and Senior Vice President and Chief Financial Officer Terry Lillis will lead a discussion of results, asset quality and capital adequacy during a live conference call, which can be accessed as follows:</FONT></P>
<UL>
<LI><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Via live Internet webcast. Please go to </FONT><U><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" color=#0000ff size=2>www</FONT></U><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" color=#0000ff size=2>.principal.com/investor </FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>at least 10-15 minutes prior to the start</FONT> <FONT face="TimesNewRomanPSMT,Times New &#13;&#10;Roman,Times,serif" size=2>of the call to register, and to download and install any necessary audio software.</FONT>
<LI><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Via telephone by dialing 800-374-1609 (U.S. and Canadian callers) or 706-643-7701 (International</FONT> <FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>callers) approximately 10 minutes prior to the start of the call. The call leader's name is Tom Graf.</FONT>
<LI><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Replays of the earnings call are available at: </FONT><U><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" color=#0000ff size=2>www</FONT></U><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" color=#0000ff size=2>.principal.com/investor </FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>or by dialing 800-642-1687</FONT> <FONT face="TimesNewRomanPSMT,Times New &#13;&#10;Roman,Times,serif" size=2>(U.S. and Canadian callers) or 706-645-9291 (International callers). The access code is 80317341.</FONT><BR>
<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Replays will be available approximately two hours after the completion of the live earnings call through</FONT> <FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>the end of day February 17, 2009.</FONT> </LI></UL>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>The company's financial supplement for fourth quarter and full year 2008 is currently available at </FONT><U><FONT face="TimesNewRomanPSMT,Times New &#13;&#10;Roman,Times,serif" color=#0000ff size=2>www</FONT></U><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" color=#0000ff size=2>.principal.com/investor</FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>, and may be referred to during the call.</FONT></P>
<P align=left><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>About the Principal Financial Group</FONT></B></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>The Principal Financial Group</FONT><FONT face="SymbolMT,Times New Roman,Times,serif" size=1>&#210; </FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(The Principal</FONT><SUP><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>&#174;</FONT></SUP><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>)</FONT><SUP><FONT face="TimesNewRomanPSMT,Times New &#13;&#10;Roman,Times,serif" size=2>4 </FONT></SUP><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=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 $247.0 billion in assets under management</FONT><SUP><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>5 </FONT></SUP><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>and serves some 19.1 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 </FONT><U><FONT face="TimesNewRomanPSMT,Times New &#13;&#10;Roman,Times,serif" color=#0000ff size=2>www</FONT></U><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" color=#0000ff size=2>.principal.com</FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>.</FONT></P>
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<P align=left><SUP><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=1>4 </FONT></SUP><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=1>"The Principal Financial Group" and &#147;The Principal&#148; are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.</FONT></P>
<P align=left><SUP><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=1>5 </FONT></SUP><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=1>As of December 31, 2008</FONT></P>
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     <TD noWrap align=center width="54%" colSpan=7><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif"><U>Operating Earnings (Loss)* </U></FONT></B><B><I><FONT face="TimesNewRomanPS-BoldItalicMT,Times New Roman,Times,serif"><U>in millions</U></FONT></I></B><U>&nbsp; </U></TD></TR>
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     <TD noWrap align=right width="27%" colSpan=3><I><FONT face="TimesNewRomanPS-ItalicMT,Times New Roman,Times,serif"><U>Three Months Ended,</U></FONT></I><U>&nbsp; </U></TD>
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     <TD noWrap align=right width="25%" colSpan=3><I><FONT face="TimesNewRomanPS-ItalicMT,Times New Roman,Times,serif"><U>Twelve Months</U><U> Ended,</U></FONT></I><U>&nbsp; </U></TD></TR>
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     <TD noWrap align=right width="42%"><B><I><FONT face="TimesNewRomanPS-BoldItalicMT,Times New Roman,Times,serif">Segment</FONT></I></B>&nbsp; </TD>
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     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">12/31/08</FONT>&nbsp; </TD>
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     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">12/31/07</FONT>&nbsp; </TD>
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     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">12/31/08</FONT>&nbsp; </TD>
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     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">12/31/07</FONT>&nbsp; </TD></TR>
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     <TD noWrap align=right width="42%"><I><FONT face="TimesNewRomanPS-ItalicMT,Times New Roman,Times,serif">U.S. Asset Accumulation</FONT></I>&nbsp; </TD>
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     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">$102.8</FONT>&nbsp; </TD>
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     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">$149.9</FONT>&nbsp; </TD>
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     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">$655.8</FONT>&nbsp; </TD></TR>
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     <TD noWrap align=right width="42%"><I><FONT face="TimesNewRomanPS-ItalicMT,Times New Roman,Times,serif">Global Asset Management</FONT></I>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">27.0</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">29.8</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">94.4</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">102.8</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right width="42%"><I><FONT face="TimesNewRomanPS-ItalicMT,Times New Roman,Times,serif">International Asset Management and</FONT></I>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right width="42%"><I><FONT face="TimesNewRomanPS-ItalicMT,Times New Roman,Times,serif">Accumulation</FONT></I>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">18.4</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">25.4</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">126.3</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">110.7</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right width="42%"><I><FONT face="TimesNewRomanPS-ItalicMT,Times New Roman,Times,serif">Life and Health Insurance</FONT></I>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">50.6</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">42.1</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">270.4</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">221.1</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right width="42%"><I><FONT face="TimesNewRomanPS-ItalicMT,Times New Roman,Times,serif">Corporate</FONT></I>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">(19.8)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">(19.0)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">(79.7)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">(37.7)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right width="42%"><B><I><FONT face="TimesNewRomanPS-BoldItalicMT,Times New Roman,Times,serif">Operating Earnings</FONT></I></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">179.0</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">228.2</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">942.7</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">1,052.7</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right width="42%"><I><FONT face="TimesNewRomanPS-ItalicMT,Times New Roman,Times,serif">Net realized capital losses, as adjusted</FONT></I>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">(188.9)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">(211.5)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">(505.3)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">(229.7)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right width="42%"><I><FONT face="TimesNewRomanPS-ItalicMT,Times New Roman,Times,serif">Other after-tax adjustments</FONT></I>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">2.4</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">17.4</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">(12.3)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">4.3</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right width="42%"><B><I><FONT face="TimesNewRomanPS-BoldItalicMT,Times New Roman,Times,serif">Net income (loss) available to common</FONT></I></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right width="42%"><B><I><FONT face="TimesNewRomanPS-BoldItalicMT,Times New Roman,Times,serif">stockholders</FONT></I></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">$</FONT><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">(7.5)</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">$</FONT><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">34.1</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">$</FONT><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">425.1</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">$</FONT><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">827.3</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="42%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="12%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="13%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="12%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="11%">
<HR noShade SIZE=2>
</TD></TR>
<TR>
     <TD width="98%" colSpan=9>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="42%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="27%" colSpan=3><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif"><U>Per Diluted Share</U></FONT></B><U>&nbsp; </U></TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="42%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="27%" colSpan=3><I><FONT face="TimesNewRomanPS-ItalicMT,Times New Roman,Times,serif"><U>Three Months Ended,</U></FONT></I><U>&nbsp; </U></TD>
     <TD width="2%"><U>&nbsp; </U></TD>
     <TD noWrap align=right width="25%" colSpan=3><I><FONT face="TimesNewRomanPS-ItalicMT,Times New Roman,Times,serif"><U>Twelve Month</U><U>s Ended,</U></FONT></I><U>&nbsp; </U></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="42%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">12/31/08</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">12/31/07</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">12/31/08</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">12/31/07</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right width="42%"><B><I><FONT face="TimesNewRomanPS-BoldItalicMT,Times New Roman,Times,serif">Operating Earnings</FONT></I></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">$0.69</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">$0.87</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">$3.61</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">$3.93</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right width="42%"><I><FONT face="TimesNewRomanPS-ItalicMT,Times New Roman,Times,serif">Net realized capital</FONT></I>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right width="42%"><I><FONT face="TimesNewRomanPS-ItalicMT,Times New Roman,Times,serif">losses, as adjusted</FONT></I>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">(0.73)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">(0.81)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">(1.93)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">(0.85)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right width="42%"><I><FONT face="TimesNewRomanPS-ItalicMT,Times New Roman,Times,serif">Other after-tax adjustments</FONT></I>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">0.01</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">0.07</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">(0.05)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">0.01</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right width="42%"><B><I><FONT face="TimesNewRomanPS-BoldItalicMT,Times New Roman,Times,serif">Net income (loss) available to common</FONT></I></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right width="42%"><B><I><FONT face="TimesNewRomanPS-BoldItalicMT,Times New Roman,Times,serif">stockholders</FONT></I></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">$(0.03)</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">$0.13</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">$1.63</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">$3.09</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right width="42%"><B><I><FONT face="TimesNewRomanPS-BoldItalicMT,Times New Roman,Times,serif">Weighted-average diluted common</FONT></I></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right width="42%"><B><I><FONT face="TimesNewRomanPS-BoldItalicMT,Times New Roman,Times,serif">shares outstanding</FONT></I></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">260.4</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">263.9</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">261.1</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">268.1</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="42%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="12%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="13%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="12%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="11%">
<HR noShade SIZE=1>
</TD></TR></TABLE><BR>
<P align=left><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=1>*Operating earnings versus U.S. GAAP (GAAP) net income available to common stockholders</FONT></B></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=1>Management uses operating earnings, which excludes the effect of net realized capital gains and losses, as adjusted, and other after-tax adjustments, for goal setting, as a basis for determining employee compensation, and evaluating performance on a basis comparable to that used by investors and securities analysts. Segment operating earnings are determined by adjusting U.S. GAAP net income available to common stockholders for net realized capital gains and losses, as adjusted, and other after-tax adjustments the company believes are not indicative of overall operating trends. Note: 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&#146;s businesses.</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

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<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=1>Page 10</FONT><FONT size=1>&nbsp; </FONT></TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=9>&nbsp; </TD></TR>
<TR>
     <TD noWrap align=center width="69%" colSpan=5><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Principal Financial Group, Inc.</FONT></B></TD>
     <TD width="2%"></TD>
     <TD noWrap align=left width="13%"></TD>
     <TD width="2%"></TD>
     <TD noWrap align=left width="11%"></TD></TR>
<TR>
     <TD noWrap align=center width="69%" colSpan=5><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>Results of Operations</FONT></B>&nbsp; </TD>
     <TD width="2%"></TD>
     <TD noWrap align=left width="13%"></TD>
     <TD width="2%"></TD>
     <TD noWrap align=left width="11%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=center width="69%" colSpan=5><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">(in millions)</FONT></B>&nbsp;&nbsp;</TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD></TR>
<TR height=5>
     <TD noWrap align=left width="37%">&nbsp;</TD>
     <TD width="2%"></TD>
     <TD noWrap align=center width="30%" colSpan=3></TD>
     <TD width="2%"></TD>
     <TD noWrap align=center width="26%" colSpan=3></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="30%" colSpan=3><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif"><U>Three Months Ended</U></FONT></B><U>&nbsp; </U></TD>
     <TD width="2%"><U></U></TD>
     <TD noWrap align=center width="26%" colSpan=3><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif"><U>Twelve Months Ended</U></FONT></B><U>&nbsp; </U></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif"><U>12/31/08</U></FONT></B><U>&nbsp; </U></TD>
     <TD width="2%"><U></U></TD>
     <TD noWrap align=center width="12%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif"><U>12/31/07</U></FONT></B><U>&nbsp; </U></TD>
     <TD width="2%"><U></U></TD>
     <TD noWrap align=center width="13%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif"><U>12/31/08</U></FONT></B><U>&nbsp; </U></TD>
     <TD width="2%"><U></U></TD>
     <TD noWrap align=center width="11%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif"><U>12/31</U><U>/07</U></FONT></B><U>&nbsp; </U></TD></TR>
<TR height=5>
     <TD noWrap align=left width="37%">&nbsp;</TD>
     <TD width="2%"></TD>
     <TD noWrap align=right width="16%"></TD>
     <TD width="2%"></TD>
     <TD noWrap align=right width="12%"></TD>
     <TD width="2%"></TD>
     <TD noWrap align=right width="13%"></TD>
     <TD width="2%"></TD>
     <TD noWrap align=right width="11%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Premiums and other considerations</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$950.3</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$1,178.1</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$4,209.2</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$4,634.1</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%">&nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Fees and other revenues</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>591.6</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>680.8</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>2,426.5</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>2,634.7</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%">&nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Net investment income</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>963.3</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>1,037.7</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>3,994.3</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>3,966.5</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%">&nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Net realized capital losses</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(226.0)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(332.5)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(694.1)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(328.8)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%">&nbsp; &nbsp; &nbsp; &nbsp;<I><FONT face="TimesNewRomanPS-ItalicMT,Times New Roman,Times,serif" size=2>Total revenues</FONT></I>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>2,279.2</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>2,564.1</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>9,935.9</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>10,906.5</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=9>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%">&nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Benefits, claims and settlement expenses</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>1,516.7</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>1,709.4</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>6,219.9</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>6,435.3</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%">&nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Dividends to policyholders</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>57.1</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>71.9</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>267.3</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>293.8</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%">&nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Operating expenses</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>765.9</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>813.2</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>2,995.1</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>3,129.2</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%">&nbsp; &nbsp; &nbsp; &nbsp;<I><FONT face="TimesNewRomanPS-ItalicMT,Times New Roman,Times,serif" size=2>Total expenses</FONT></I>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>2,339.7</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>2,594.5</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>9,482.3</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>9,858.3</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=9>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%">&nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Income (loss) from continuing operations</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>before income taxes</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(60.5)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(30.4)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>453.6</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>1,048.2</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%">&nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Income taxes (benefits)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(61.3)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(52.2)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(4.5)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>208.1</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%">&nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Income from continuing operations, net of</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="16%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>related income taxes</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>0.8</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>21.8</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>458.1</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>840.1</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=9>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%">&nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Income from discontinued operations, net</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="16%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>of related taxes</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>-</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>20.6</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>-</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>20.2</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%">&nbsp; &nbsp; &nbsp; &nbsp;<I><FONT face="TimesNewRomanPS-ItalicMT,Times New Roman,Times,serif" size=2>Net income</FONT></I>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>0.8</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>42.4</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>458.1</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>860.3</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%">&nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Preferred stock dividends</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>8.3</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>8.3</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>33.0</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>33.0</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%">&nbsp; &nbsp; &nbsp;<I><FONT face="TimesNewRomanPS-ItalicMT,Times New Roman,Times,serif" size=2>Net income (loss) available to common</FONT></I>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="16%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<I><FONT face="TimesNewRomanPS-ItalicMT,Times New Roman,Times,serif" size=2>stockholders</FONT></I>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$(7.5)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$34.1</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$425.1</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$827.3</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=9>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%">&nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Less:</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%">&nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Net realized capital losses, as adjusted</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(188.9)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(211.5)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(505.3)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(229.7)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%">&nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Other after-tax adjustments</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>2.4</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>17.4</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(12.3)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>4.3</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%">&nbsp; &nbsp; &nbsp; &nbsp;<I><FONT face="TimesNewRomanPS-ItalicMT,Times New Roman,Times,serif" size=2>Operating earnings</FONT></I>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$ 179.0</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$228.2</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$ 942.7</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$1,052.7</FONT>&nbsp; </TD></TR></TABLE><BR>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="84%" colSpan=5>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<B><I><FONT face="TimesNewRomanPS-BoldItalicMT,Times New Roman,Times,serif" size=2>Selected Balance Sheet Statistics</FONT></I></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR>
     <TD width="84%" colSpan=5>
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="13%">
<HR noShade SIZE=1>
</TD></TR>
<TR>
     <TD width="99%" colSpan=7>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="17%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="20%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2><U>Period Ended</U></FONT></B><U>&nbsp; </U></TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="17%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2><U>12/31/08</U></FONT><U>&nbsp; </U></TD>
     <TD width="2%"><U></U></TD>
     <TD noWrap align=center width="20%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2><U>12/31/07</U></FONT><U>&nbsp; </U></TD>
     <TD width="2%"><U></U></TD>
     <TD noWrap align=center width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2><U>12</U><U>/31/06</U></FONT><U>&nbsp; </U></TD></TR>
<TR height=5>
     <TD noWrap align=left width="43%">&nbsp;</TD>
     <TD width="2%"></TD>
     <TD noWrap align=right width="17%"></TD>
     <TD width="2%"></TD>
     <TD noWrap align=right width="20%"></TD>
     <TD width="2%"></TD>
     <TD noWrap align=right width="13%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Total assets (in billions)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="17%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$ 128.2</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$ 154.5</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$ 143.7</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Total common equity (in millions)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="17%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$ 1,930.8</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$ 6,879.7</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$ 7,318.8</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Total common equity excluding accumulated</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="17%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="20%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>other comprehensive income (in millions)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="17%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$ 6,842.4</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$ 6,459.5</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$ 6,471.9</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>End of period common shares outstanding</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="17%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="20%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(in millions)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="17%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>259.3</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>259.1</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>268.4</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Book value per common share</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="17%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$ 7.45</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$ 26.55</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$ 27.27</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Book value per common share excluding</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="17%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="20%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%">&nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>accumulated other comprehensive income</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="17%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$ 26.39</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$ 24.93</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$ 24.11</FONT>&nbsp; </TD></TR></TABLE><BR>
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     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=1>Page 11</FONT><FONT size=1>&nbsp; </FONT></TD>
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     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD></TR>
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     <TD width="98%" colSpan=9>&nbsp; </TD></TR>
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     <TD width="98%" colSpan=9>&nbsp; </TD></TR>
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     <TD width="98%" colSpan=9>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=center width="98%" colSpan=9><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>Principal Financial Group, Inc.</FONT></B> </TD></TR>
<TR vAlign=bottom>
     <TD align=center width="98%" colSpan=9><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>Reconciliation of Non-GAAP Financial Measures to U.S. GAAP</FONT></B> </TD></TR>
<TR vAlign=bottom>
     <TD align=center width="98%" colSpan=9><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>(in millions, except as indicated)</FONT></B> </TD></TR>
<TR>
     <TD width="98%" colSpan=9>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="28%" colSpan=3><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2><U>Three Months Ended</U></FONT></B><U>&nbsp; </U></TD>
     <TD width="2%"><U></U></TD>
     <TD noWrap align=center width="23%" colSpan=3><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2><U>Twelve Months Ended</U></FONT></B><U>&nbsp; </U></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="14%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2><U>12/31/08</U></FONT></B><U>&nbsp; </U></TD>
     <TD width="2%"><U></U></TD>
     <TD noWrap align=center width="12%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2><U>12/31/07</U></FONT></B><U>&nbsp; </U></TD>
     <TD width="2%"><U></U></TD>
     <TD noWrap align=center width="11%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2><U>12/31/08</U></FONT></B><U>&nbsp; </U></TD>
     <TD width="2%"><U></U></TD>
     <TD noWrap align=center width="10%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2><U>12/31</U><U>/07</U></FONT></B><U>&nbsp; </U></TD></TR>
<TR height=5>
     <TD noWrap align=left width="43%">&nbsp;</TD>
     <TD width="2%"></TD>
     <TD noWrap align=left width="14%"></TD>
     <TD width="2%"></TD>
     <TD noWrap align=left width="12%"></TD>
     <TD width="2%"></TD>
     <TD noWrap align=left width="11%"></TD>
     <TD width="2%"></TD>
     <TD noWrap align=left width="10%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>Diluted Earnings Per Common Share:</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Operating earnings</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.69</FONT> </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.87</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>3.61</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>3.93</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Net realized capital losses</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (0.73)</FONT></TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(0.81)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(1.93)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(0.85)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Other after-tax adjustments</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.01</FONT> </TD>
     <TD width="2%"></TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.07</FONT>&nbsp; </TD>
     <TD width="2%"><U></U></TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(0.05)</FONT>&nbsp; </TD>
     <TD width="2%"></TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>0.01</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Net income (loss) available to common stockholders</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (0.03)</FONT>&nbsp; </TD>
     <TD width="2%"><U></U></TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.13</FONT>&nbsp; </TD>
     <TD width="2%"><U></U></TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1.63</FONT>&nbsp; </TD>
     <TD width="2%"></TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3.09</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=9>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>Book Value Per Common Share Excluding</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>Accumulated Other Comprehensive Income:</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Book value per common share excluding accumulated</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>other comprehensive income</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT style="WIDTH: 30pt; TEXT-ALIGN: right" face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>26.39</FONT></TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>24.93</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>26.39</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>24.93</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Net unrealized capital gains (losses)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT style="WIDTH: 30pt; TEXT-ALIGN: right" face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(16.08)</FONT></TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>1.22</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(16.08)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>1.22</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Foreign currency translation</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(0.67)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>0.14</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(0.67)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>0.14</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Net unrecognized post-retirement benefit obligations</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(2.19)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>0.26</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(2.19)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>0.26</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Book value per common share including accumulated</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>other comprehensive income</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>7.45</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>26.55</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>7.45</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>26.55</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=9>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>Operating Revenues:</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>USAA</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>1,100.5</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>1,300.3</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>4,798.4</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>5,150.2</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD vAlign=top noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>GAM</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>173.5</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>171.4</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>598.5</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>572.9</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>IAMA</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>148.6</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>255.4</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>849.0</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>796.3</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Life and Health</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>1,154.9</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>1,221.6</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>4,682.0</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>4,857.1</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Corporate</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(50.6)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(49.6)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(202.8)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(156.8)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Total operating revenues</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>2,526.9</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>2,899.1</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>10,725.1</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>11,219.7</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Add: Net realized capital losses and related fee</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>adjustments</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(239.5)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(337.0)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(757.0)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(343.0)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Terminated commercial securities issuance operation</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(8.2)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>2.7</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(32.2)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>30.1</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Less: Operating revenues from discontinued real estate</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>-</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>0.7</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>-</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>0.3</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Total GAAP revenues</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>2,279.2</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>2,564.1</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>9,935.9</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>10,906.5</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="43%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=right width="14%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="12%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="11%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="10%">
<HR noShade SIZE=2>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>Operating Earnings:</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>USAA</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>102.8</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>149.9</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>531.3</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>655.8</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>GAM</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>27.0</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>29.8</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>94.4</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>102.8</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>IAMA</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>18.4</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>25.4</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>126.3</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>110.7</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Life and Health</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>50.6</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>42.1</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>270.4</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>221.1</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Corporate</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(19.8)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(19.0)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(79.7)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(37.7)</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="43%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=right width="14%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=right width="12%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=right width="11%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=right width="10%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Total operating earnings</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>179.0</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>228.2</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>942.7</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>1,052.7</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Net realized capital losses</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(188.9)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(211.5)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(505.3)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(229.7)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Other after-tax adjustments</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>2.4</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>17.4</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(12.3)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>4.3</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="43%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=right width="14%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=right width="12%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=right width="11%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=right width="10%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Net income (loss) available to common stockholders</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(7.5)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>34.1</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>425.1</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>827.3</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="43%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="14%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="12%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="11%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="10%">
<HR noShade SIZE=2>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>Net Realized Capital Gains (Losses):</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Net realized capital losses, as adjusted</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(188.9)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(211.5)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(505.3)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(229.7)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Add:</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Periodic settlements and accruals on non-hedge derivatives</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>13.2</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>4.0</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>59.0</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>18.9</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Amortization of DPAC and sale inducement costs</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>93.3</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(15.3)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>47.2</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(10.4)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Certain market value adjustments of embedded derivatives</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>3.0</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>-</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>9.5</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>-</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Capital gains distributed</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(36.1)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>3.3</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(50.3)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>11.0</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Tax impacts</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(105.5)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(118.4)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(257.2)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(125.5)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Minority interest capital gains</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(5.3)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>4.9</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(0.9)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>11.6</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Less related fee adjustments:</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Unearned front-end fee income</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>-</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>-</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>-</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>8.7</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Certain market value adjustments to fee revenues</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(0.3)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(0.5)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(3.9)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(4.0)</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="43%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=right width="14%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=right width="12%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=right width="11%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=right width="10%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>GAAP net realized capital losses</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(226.0)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(332.5)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(694.1)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(328.8)</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="43%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=right width="14%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="12%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="11%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="10%">
<HR noShade SIZE=2>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>Other After Tax Adjustments:</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Tax refinements related to prior years</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>8.2</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(0.2)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>8.2</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(21.4)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Change in estimated loss related to a prior year legal</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>contingency</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>-</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>-</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>7.6</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>-</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Gain on disposal of discontinued real estate investments</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>-</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>20.0</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>-</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>20.0</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Terminated commercial securities issuance operation</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(5.8)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(2.4)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(28.1)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>5.7</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="43%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=right width="14%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=right width="12%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=right width="11%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=right width="10%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="43%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Total other after-tax adjustments</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>2.4</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>17.4</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(12.3)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>4.3</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="43%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=right width="14%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=right width="12%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=right width="11%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=right width="10%">
<HR noShade SIZE=2>
</TD></TR></TABLE><BR>
<HR align=center width="100%" noShade SIZE=2>

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final4thqtrer09.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report:
February 9, 2009
(Date of earliest event reported)
PRINCIPAL FINANCIAL GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware
1-16725
42-1520346
(State or other jurisdiction
(Commission file number)
(I.R.S. Employer
of incorporation)
Identification Number)
711 High Street, Des Moines, Iowa 50392
(Address of principal executive offices)
(515) 247-5111
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the
registrant under any of the following provisions:
[    ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[    ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[    ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
[    ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Page 2
Item 2.02. Results of Operations and Financial Condition
On February 9, 2009, Principal Financial Group, Inc. publicly announced information regarding its
results of operations and financial condition for
the quarter
ended December 31, 2008.  The text of
the announcement is included herewith as Exhibit 99.
Item 9.01 Financial Statements and Exhibits
99 Fourth Quarter 2008 Earnings Release
SIGNATURE
Prsuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PRINCIPAL FINANCIAL GROUP, INC.
By:
/s/
Terrance J. Lillis
Name: Terrance J. Lillis
Title:    Senior Vice President and Chief Financial
Officer
Date: February 10, 2009
Page 3
EXHIBIT 99
EXHIBIT
RELEASE
:
On receipt Final at 02/09/2009 11:46 AM
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 FULL YEAR AND FOURTH QUARTER 2008 RESULTS
Des Moines, IA (February 9, 2009) – Principal Financial Group, Inc. (NYSE: PFG) today announced results for full year and fourth quarter 2008. The company reported net income available to common stockholders of $425.1 million, or $1.63 per diluted share for the twelve months ended December 31, 2008, compared to $827.3 million, or $3.09 per diluted share for the twelve months ended December 31, 2007. The company reported operating earnings of $942.7 million for 2008, compared to $1,052.7 million for 2007. Operating earnings per share (EPS) for 2008 were $3.61 compared to $3.93 for 2007. Operating revenues for 2008 were $10,725.1 million compared to $11,219.7 million for 2007.
1
For the three months ended December 31, 2008 the company reported a net loss available to common stockholders of $7.5 million or $0.03 per diluted share compared to net income available to common stockholders of $34.1 million, or $0.13 per diluted share for the three months ended December 31, 2007. The company reported operating earnings of $179.0 million for fourth quarter 2008, compared to $228.2 million for fourth quarter 2007. EPS for fourth quarter 2008 was $0.69 compared to $0.87 for the same period in 2007. Operating revenues for fourth quarter 2008 were $2,526.9 million compared to $2,899.1 million for the same period last year. Assets under management were $247.0 billion as of December 31, 2008 compared to $311.1 billion as of December 31, 2007.
"Given the difficult business environment, The Principal delivered very solid operating results for the fourth quarter and the year, demonstrating the value of revenue and earnings diversification, and strong business fundamentals," said Larry Zimpleman, president and chief executive officer. "In addition, we continued to focus on effectively managing risks in a challenging market by building on our liquidity position and focusing capital on our longer-term growth opportunities."
Highlights:
Value of Diversification
·
Life and Health earnings improved $49.3 million, or 22 percent in 2008 to $270.4 million, driving a 250 basis point improvement in segment return on equity.
·
Principal International earnings improved $15.6 million, or 14 percent in 2008, to a record $126.3 million.
·
Despite a 21 percent drop in assets under management in 2008 due to market conditions, 2008 operating revenues declined only 4 percent compared to 2007, on the strength of record revenues for the Global Asset Management and International Asset Management and Accumulation segments.
1
Use of non-GAAP financial measures is discussed in this release after Segment Highlights.
Page 4
Strong Fundamentals
·
Maintained outstanding sales of the company's three key retirement and investment products despite a difficult sales environment, with $21.1 billion of sales on a combined basis in 2008, compared to a record $21.7 billion for 2007. This includes fourth quarter 2008 sales of $2.1 billion for Full Service Accumulation, $1.8 billion for Principal Funds and $0.7 billion for Individual Annuities.
·
Record net cash flows in 2008 of $5.5 billion for Full Service Accumulation and $2.8 billion for Individual Annuities, an increase from 2007 of 17 percent and 38 percent, respectively, reflecting excellent sales and retention.
·
Strong expense management, with total company operating expenses down $63.5 million, or 8 percent compared to fourth quarter 2007.
Financial Strength and Risk Management
·
Increased cash and cash equivalent holdings by 94 percent from a year ago to $2.6 billion at December 31, 2008.
·
Eliminated the company's modest general account securities lending program.
·
Continued to limit the size of the variable annuities with guaranteed living benefits business, minimizing the impact of equity markets on life company capital ratios.
·
Reduced loan inventory in the company's commercial mortgage securities issuance operation from $1.7 billion at the beginning of 2008 to $20 million at year-end.
·
Began scaling back the Investment Only block, adding to the company's capital cushion, and as part of longer-term focus on redeploying capital into higher growth businesses.
·
The company estimates approximately $800 million of excess capital
2
as of December 31, 2008, and an NAIC RBC ratio of between 420 and 445 percent.
"While uncertainty remains around the length and severity of the global recession, we enter 2009 with a strong and proven business model," said Zimpleman. "Deposits into our three asset management and accumulation segments
3
were a record $112 billion in 2008. Principal Global Investors' relative investment performance remains strong, and we continue to attract third party assets. And Full Service Accumulation began 2009 with its largest retirement plan win on record, providing
defined contribution and nonqualified plan services
to Community Health Systems, the largest publicly traded hospital company in the U.S. With some 80,000 participants and $1.4 billion in assets, this win is further evidence of the competitive advantage we have with Total Retirement Suite
SM
."
Added Zimpleman: "In 2009, we'll continue working to address the challenges the market presents. We believe The Principal will emerge even stronger: by maintaining our risk management focus; by balancing expense discipline with the need to invest in growth; and importantly, by staying true to its mission – to help growing businesses, individuals and institutional clients achieve financial security and success."
-------------------------------------------------
2
The company defines excess capital as the combination of debt capacity, cash at the holding company, and capital at the life company above what is required to maintain Principal Life's current credit rating.
3
Combined results from the U.S. Asset Accumulation and International Asset Management and Accumulation segments, and non-affiliated results from the Global Asset Management segment.
Page 5
Net Income (Loss)
Net income available to common stockholders of $425.1 million for 2008 reflects net realized capital losses of $505.3 million, which includes: $267.2 million of losses related to sales and permanent impairment of fixed maturity securities (including $58.1 million related to Lehman Brothers Holdings and $45.3 million related to Washington Mutual); $68.0 million of net losses related to hedging activities; $41.6 million of losses on mark to market of equity securities held as trading; $40.1 million of losses on mark to market of fixed maturity securities held as trading; $35.3 million of losses on mark to market of seed money investments; and $30.1 million of impairments on equity securities (including $6.5 million related to Lehman Brothers Holdings). Net income also includes a $12.3 million net loss from other after-tax adjustments, including a $28.1 million loss due to termination of the commercial mortgage securities issuance operation.
The net loss available to common stockholders of $7.5 million for fourth quarter 2008 reflects net realized capital losses of $188.9 million, which includes: $102.3 million of losses related to sales and permanent impairment of fixed maturity securities; $29.3 million of losses on mark to market of equity securities held as trading; $17.6 million of losses on bridge and mezzanine loans held in Principal Global Investors' spread business; and $14.2 million of losses on mark to market of seed money investments. The net loss also includes a $2.4 million net gain from other after-tax adjustments.
Segment Highlights
U.S. Asset Accumulation
Segment operating earnings for fourth quarter 2008 were $102.8 million, compared to $149.9 million for the same period in 2007. The decline primarily reflects the impact of significant equity market declines during fourth quarter 2008 and over the trailing twelve month period. Full service accumulation earnings were $54.3 million for fourth quarter 2008, compared to $82.1 million in fourth quarter 2007, reflecting a 16 percent decline in average account values. Individual annuities reported a $0.1 million operating loss in the fourth quarter 2008 compared to earnings of $15.1 million for fourth quarter 2007, primarily due to: unfavorable equity markets, which resulted in a true-up of variable annuity deferred policy acquisition costs during fourth quarter 2008, which reduced earnings by $11.6 million; and an increase in guaranteed minimum death benefit reserves
,
which reduced earnings by $4.1 million
.
Principal Funds' earnings were $2.0 million for fourth quarter 2008, compared to $11.3 million in fourth quarter 2007, reflecting a 29 percent decline in average account values.
Operating revenues for the fourth quarter were $1,100.5 million, compared to $1,300.3 million for the same period in 2007. The decline primarily reflects lower single premium group annuity sales in the full service payout business. The single premium group annuity product, which is typically used to fund defined benefit plan terminations, tends to vary from period to period. The decline also reflects lower fees in the full service accumulation and mutual fund businesses resulting from the negative impact of markets on account values.
Segment assets under management were $139.1 billion as of December 31, 2008, compared to $178.1 billion as of December 31, 2007.
Page 6
Global Asset Management
Segment operating earnings for fourth quarter 2008 were $27.0 million compared to $29.8 million in the prior year quarter. Higher earnings from performance incentives in fourth quarter 2008 were more than offset by the impact of lower average assets under management and lower fees due to a slowdown in the real estate market.
Operating revenues for fourth quarter increased to a record $173.5 million compared to $171.4 million for the same period in 2007.
Third party assets under management for the segment were $70.3 billion as of December 31, 2008, compared to $87.4 billion as of December 31, 2007.
International Asset Management and Accumulation
Segment operating earnings for fourth quarter 2008 were $18.4 million, compared to $25.4 million for the same period in 2007. The decline was primarily due to: weakening of Latin American currencies relative to the U.S. dollar, which reduced fourth quarter 2008 earnings by $6.5 million when compared to the same period a year ago; and interest rate related write-downs of government bonds of $3.3 million after-tax in Brazil included in operating earnings under equity method accounting. Both periods benefited by $3.8 million after-tax from higher yields on invested assets in Chile due to unusually high inflation. Fourth quarter 2007 earnings included a $5.6 million tax charge, due to new tax regulations in Mexico.
Operating revenues were $148.6 million for fourth quarter 2008, compared to $255.4 million for the same period last year. The decrease was primarily due to weakening of Latin American currencies relative to the U.S. dollar and lower sales of single premium group annuities in Chile.
Assets under management for the segment were $23.1 billion as of December 31, 2008, compared to $28.7 billion as of December 31, 2007, with $5.0 billion of the decline attributable to foreign currency.
Life and Health Insurance
Segment operating earnings for fourth quarter 2008 were $50.6 million, compared to $42.1 million for the same period in 2007. Individual Life earnings were $29.6 million for fourth quarter 2008 compared to $26.0 million for the same period in 2007, reflecting growth in the block of business overall, and $2.9 million of additional earnings from updating the policyholder dividend scale to reflect experience of the closed block. Reflecting claim seasonality in higher deductible plans, the Health division had an operating loss of $5.6 million in fourth quarter 2008. This compares to an operating loss of $9.4 million for the same period in 2007, with improvement primarily due to lower loss ratios. Specialty Benefits earnings were $26.6 million for fourth quarter 2008 compared to $25.5 million for the same period in 2007, as favorable claims experience was partially offset by lower investment income.
Operating revenues were $1,154.9 million for fourth quarter 2008, compared to $1,221.6 million for the same period in 2007. The decline was primarily due to a $56.4 million drop in Health division revenues, which primarily reflects a decline in covered members.
Page 7
Corporate
Operating losses for fourth quarter 2008 were $19.8 million, compared to operating losses of $19.0 million for the same period in 2007. Results for Corporate primarily reflect interest expense on company debt and payment of the preferred stock dividend.
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 measures at the end of the release. The company adjusts U.S. GAAP measures for items not directly related to ongoing operations. However, it is possible these adjusting items have occurred in the past and could recur in future reporting periods. Management also uses non-GAAP measures for goal setting, as a basis for determining employee and senior management awards and compensation, and evaluating performance on a basis comparable to that used by investors and securities analysts.
Forward looking and cautionary statements
This press release contains forward-looking statements, including, without limitation, statements as to operating earnings, net income available to common stockholders, net cash flows, realized and unrealized losses, capital and liquidity positions, sales and earnings trends, and management's beliefs, expectations, goals and opinions. The company does not undertake to update or revise these statements, which are based on a number of assumptions concerning future conditions that may ultimately prove to be inaccurate.
Future events and their effects on the company may not be those anticipated, and actual results may differ materially from the results anticipated in these forward-looking statements. The risks, uncertainties and factors that could cause or contribute to such material differences are discussed in the company's annual report on Form 10-K for the year ended December 31, 2007, and in the company's quarterly report on Form 10-Q for the quarter ended September 30, 2008, filed by the company with the Securities and Exchange Commission, as updated or supplemented from time to time in subsequent filings. These risks and uncertainties include, without limitation: adverse capital and credit market conditions that may significantly affect the company's ability to meet liquidity needs, access to capital and cost of capital; difficult conditions in the global capital markets and the general economy, which the company does not expect to improve in the near future, that may materially adversely affect the company's business and results of operations; the actions of the U.S. government, Federal Reserve and other governmental and regulatory bodies for purposes of stabilizing the financial markets might not achieve the intended effect; the risk from acquiring new businesses, which could result in the impairment of goodwill and/or intangible assets recognized at the time of acquisition; impairment of other financial institutions that could adversely affect the company; investment risks which may diminish the value of the company's invested assets and the investment returns credited to customers, which could reduce sales, revenues, assets under management and net income; requirements to post collateral or make payments related to declines in market value of specified assets may adversely affect company liquidity and expose the company to counterparty credit risk; changes in laws, regulations or accounting standards that may reduce company profitability; fluctuations in foreign currency exchange rates that could reduce company profitability; Principal Financial Group, Inc.'s primary reliance, as a holding company, on dividends from its subsidiaries to meet debt payment obligations and regulatory restrictions on the ability of subsidiaries to pay such dividends; competitive factors; volatility of financial markets; decrease in ratings; interest rate changes; inability to attract and retain sales representatives; international business risks; a pandemic, terrorist attack or other catastrophic event; and default of the company's re-insurers.
Page 8
Earnings Conference Call
On Tuesday, February 10, 2009 at 10:00 A.M. (ET), President and Chief Executive Officer Larry Zimpleman and Senior Vice President and Chief Financial Officer Terry Lillis will lead a discussion of results, asset quality and capital adequacy during a live conference call, which can be accessed as follows:
Via live Internet webcast. Please go to
www
.principal.com/investor
at least 10-15 minutes prior to the start
of the call to register, and to download and install any necessary audio software.
Via telephone by dialing 800-374-1609 (U.S. and Canadian callers) or 706-643-7701 (International
callers) approximately 10 minutes prior to the start of the call. The call leader's name is Tom Graf.
Replays of the earnings call are available at:
www
.principal.com/investor
or by dialing 800-642-1687
(U.S. and Canadian callers) or 706-645-9291 (International callers). The access code is 80317341.
Replays will be available approximately two hours after the completion of the live earnings call through
the end of day February 17, 2009.
The company's financial supplement for fourth quarter and full year 2008 is currently available at
www
.principal.com/investor
, and may be referred to during the call.
About the Principal Financial Group
The Principal Financial Group
Ò
(The Principal
®
)
4
is a leader in offering businesses, individuals and institutional clients a wide range of financial products and services, including retirement and investment services, life and health insurance, and banking through its diverse family of financial services companies. A member of the Fortune 500, the Principal Financial Group has $247.0 billion in assets under management
5
and serves some 19.1 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
.
###
4
"The Principal Financial Group" and "The Principal" are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.
5
As of December 31, 2008
Page 9
Summary of Segment and Principal Financial Group, Inc. Results
Operating Earnings (Loss)*
in millions
Three Months Ended,
Twelve Months
Ended,
Segment
12/31/08
12/31/07
12/31/08
12/31/07
U.S. Asset Accumulation
$102.8
$149.9
$531.3
$655.8
Global Asset Management
27.0
29.8
94.4
102.8
International Asset Management and
Accumulation
18.4
25.4
126.3
110.7
Life and Health Insurance
50.6
42.1
270.4
221.1
Corporate
(19.8)
(19.0)
(79.7)
(37.7)
Operating Earnings
179.0
228.2
942.7
1,052.7
Net realized capital losses, as adjusted
(188.9)
(211.5)
(505.3)
(229.7)
Other after-tax adjustments
2.4
17.4
(12.3)
4.3
Net income (loss) available to common
stockholders
$
(7.5)
$
34.1
$
425.1
$
827.3
Per Diluted Share
Three Months Ended,
Twelve Month
s Ended,
12/31/08
12/31/07
12/31/08
12/31/07
Operating Earnings
$0.69
$0.87
$3.61
$3.93
Net realized capital
losses, as adjusted
(0.73)
(0.81)
(1.93)
(0.85)
Other after-tax adjustments
0.01
0.07
(0.05)
0.01
Net income (loss) available to common
stockholders
$(0.03)
$0.13
$1.63
$3.09
Weighted-average diluted common
shares outstanding
260.4
263.9
261.1
268.1
*Operating earnings versus U.S. GAAP (GAAP) net income available to common stockholders
Management uses operating earnings, which excludes the effect of net realized capital gains and losses, as adjusted, and other after-tax adjustments, for goal setting, as a basis for determining employee compensation, and evaluating performance on a basis comparable to that used by investors and securities analysts. Segment operating earnings are determined by adjusting U.S. GAAP net income available to common stockholders for net realized capital gains and losses, as adjusted, and other after-tax adjustments the company believes are not indicative of overall operating trends. Note: 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.
Page 10
Principal Financial Group, Inc.
Results of Operations
(in millions)
Three Months Ended
Twelve Months Ended
12/31/08
12/31/07
12/31/08
12/31
/07
Premiums and other considerations
$950.3
$1,178.1
$4,209.2
$4,634.1
Fees and other revenues
591.6
680.8
2,426.5
2,634.7
Net investment income
963.3
1,037.7
3,994.3
3,966.5
Net realized capital losses
(226.0)
(332.5)
(694.1)
(328.8)
Total revenues
2,279.2
2,564.1
9,935.9
10,906.5
Benefits, claims and settlement expenses
1,516.7
1,709.4
6,219.9
6,435.3
Dividends to policyholders
57.1
71.9
267.3
293.8
Operating expenses
765.9
813.2
2,995.1
3,129.2
Total expenses
2,339.7
2,594.5
9,482.3
9,858.3
Income (loss) from continuing operations
before income taxes
(60.5)
(30.4)
453.6
1,048.2
Income taxes (benefits)
(61.3)
(52.2)
(4.5)
208.1
Income from continuing operations, net of
related income taxes
0.8
21.8
458.1
840.1
Income from discontinued operations, net
of related taxes
-
20.6
-
20.2
Net income
0.8
42.4
458.1
860.3
Preferred stock dividends
8.3
8.3
33.0
33.0
Net income (loss) available to common
stockholders
$(7.5)
$34.1
$425.1
$827.3
Less:
Net realized capital losses, as adjusted
(188.9)
(211.5)
(505.3)
(229.7)
Other after-tax adjustments
2.4
17.4
(12.3)
4.3
Operating earnings
$ 179.0
$228.2
$ 942.7
$1,052.7
Selected Balance Sheet Statistics
Period Ended
12/31/08
12/31/07
12
/31/06
Total assets (in billions)
$ 128.2
$ 154.5
$ 143.7
Total common equity (in millions)
$ 1,930.8
$ 6,879.7
$ 7,318.8
Total common equity excluding accumulated
other comprehensive income (in millions)
$ 6,842.4
$ 6,459.5
$ 6,471.9
End of period common shares outstanding
(in millions)
259.3
259.1
268.4
Book value per common share
$ 7.45
$ 26.55
$ 27.27
Book value per common share excluding
accumulated other comprehensive income
$ 26.39
$ 24.93
$ 24.11
Page 11
Principal Financial Group, Inc.
Reconciliation of Non-GAAP Financial Measures to U.S. GAAP
(in millions, except as indicated)
Three Months Ended
Twelve Months Ended
12/31/08
12/31/07
12/31/08
12/31
/07
Diluted Earnings Per Common Share:
Operating earnings
0.69
0.87
3.61
3.93
Net realized capital losses
(0.73)
(0.81)
(1.93)
(0.85)
Other after-tax adjustments
0.01
0.07
(0.05)
0.01
Net income (loss) available to common stockholders
(0.03)
0.13
1.63
3.09
Book Value Per Common Share Excluding
Accumulated Other Comprehensive Income:
Book value per common share excluding accumulated
other comprehensive income
26.39
24.93
26.39
24.93
Net unrealized capital gains (losses)
(16.08)
1.22
(16.08)
1.22
Foreign currency translation
(0.67)
0.14
(0.67)
0.14
Net unrecognized post-retirement benefit obligations
(2.19)
0.26
(2.19)
0.26
Book value per common share including accumulated
other comprehensive income
7.45
26.55
7.45
26.55
Operating Revenues:
USAA
1,100.5
1,300.3
4,798.4
5,150.2
GAM
173.5
171.4
598.5
572.9
IAMA
148.6
255.4
849.0
796.3
Life and Health
1,154.9
1,221.6
4,682.0
4,857.1
Corporate
(50.6)
(49.6)
(202.8)
(156.8)
Total operating revenues
2,526.9
2,899.1
10,725.1
11,219.7
Add: Net realized capital losses and related fee
adjustments
(239.5)
(337.0)
(757.0)
(343.0)
Terminated commercial securities issuance operation
(8.2)
2.7
(32.2)
30.1
Less: Operating revenues from discontinued real estate
-
0.7
-
0.3
Total GAAP revenues
2,279.2
2,564.1
9,935.9
10,906.5
Operating Earnings:
USAA
102.8
149.9
531.3
655.8
GAM
27.0
29.8
94.4
102.8
IAMA
18.4
25.4
126.3
110.7
Life and Health
50.6
42.1
270.4
221.1
Corporate
(19.8)
(19.0)
(79.7)
(37.7)
Total operating earnings
179.0
228.2
942.7
1,052.7
Net realized capital losses
(188.9)
(211.5)
(505.3)
(229.7)
Other after-tax adjustments
2.4
17.4
(12.3)
4.3
Net income (loss) available to common stockholders
(7.5)
34.1
425.1
827.3
Net Realized Capital Gains (Losses):
Net realized capital losses, as adjusted
(188.9)
(211.5)
(505.3)
(229.7)
Add:
Periodic settlements and accruals on non-hedge derivatives
13.2
4.0
59.0
18.9
Amortization of DPAC and sale inducement costs
93.3
(15.3)
47.2
(10.4)
Certain market value adjustments of embedded derivatives
3.0
-
9.5
-
Capital gains distributed
(36.1)
3.3
(50.3)
11.0
Tax impacts
(105.5)
(118.4)
(257.2)
(125.5)
Minority interest capital gains
(5.3)
4.9
(0.9)
11.6
Less related fee adjustments:
Unearned front-end fee income
-
-
-
8.7
Certain market value adjustments to fee revenues
(0.3)
(0.5)
(3.9)
(4.0)
GAAP net realized capital losses
(226.0)
(332.5)
(694.1)
(328.8)
Other After Tax Adjustments:
Tax refinements related to prior years
8.2
(0.2)
8.2
(21.4)
Change in estimated loss related to a prior year legal
contingency
-
-
7.6
-
Gain on disposal of discontinued real estate investments
-
20.0
-
20.0
Terminated commercial securities issuance operation
(5.8)
(2.4)
(28.1)
5.7
Total other after-tax adjustments
2.4
17.4
(12.3)
4.3