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: NOVEMBER 1, 2004
                        (Date of earliest event reported)



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


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


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

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

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

Check  the  appropriate  box  below  if the  Form  8-K  filing  is  intended  to
simultaneously  satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
    (17 CFR 230.425)
[ ] Soliciting  material pursuant to Rule 14a-12 under the Exchange Act
    (17 CFR 240.14a-12)
[ ] Pre-commencement  communications pursuant to Rule 14d-2(b) under the
    Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
    Exchange Act (17 CFR 240.13e-4(c))

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


<PAGE>


ITEM 2.O2  RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On November 1,  2004, Principal Financial Group, Inc. publicly announced
information  regarding its results of operations and financial condition for the
quarter  ended  September  30, 2004.  The text of the  announcement  is included
herewith as Exhibit 99.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

99    Third Quarter 2004 Earnings Release

                                    SIGNATURE

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


                                    PRINCIPAL FINANCIAL GROUP, INC.


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



Date:  November 2, 2004


                                       2
<PAGE>

RELEASE: On receipt
MEDIA CONTACT:                              Jeff Rader, 515-247-7883,
                                            rader.jeff@principal.com
INVESTOR RELATIONS CONTACT:                 TOM GRAF, 515-235-9500, INVESTOR-
                                            RELATIONS@PRINCIPAL.COM

       PRINCIPAL FINANCIAL GROUP, INC. REPORTS THIRD QUARTER 2004 RESULTS

         Des Moines,  IA (November 1, 2004) -- Principal  Financial Group,  Inc.
(NYSE:  PFG) today  announced  record  quarterly net income for the three months
ended  September  30,  2004,  of $298.8  million,  or $0.95 per  diluted  share,
compared to net income of $184.5  million,  or $0.57 per  diluted  share for the
three months ended September 30, 2003.  Third quarter 2004 net income includes a
$94.1 million after-tax gain (reported as discontinued operations) from the sale
of the mortgage  banking  business,  which was  completed  on July 1, 2004.  The
company reported record quarterly operating earnings of $205.2 million for third
quarter  2004,  compared to $167.3  million for third  quarter  2003.  Operating
earnings per diluted share (EPS) for third  quarter 2004 were $0.66  compared to
$0.52 for the same period in 2003.  Operating  revenues  for third  quarter 2004
were  $2,111.8  million  compared to  $1,977.7  million for the same period last
year.1

     Additional highlights for third quarter 2004 include:

o    Record assets under management of $156.0 billion,  up $21.2 billion,  or 16
     percent  from a year  ago,  including  20  percent  growth  for U.S.  Asset
     Management and Accumulation,  and 31 percent growth for International Asset
     Management and Accumulation.
o    Record  operating  earnings of $123.5 million for U.S. Asset Management and
     Accumulation, including a record $57.2 million of earnings for Pension Full
     Service  Accumulation  (full  service  accumulation),  which  increased  24
     percent over the prior year quarter.
o    Record full service  accumulation  account values of $60.0  billion,  up 18
     percent,  record full service accumulation deposits (excluding M&A) of $3.4
     billion, up 21 percent,  and strong full service accumulation sales of $1.3
     billion (all organic), up 13 percent (comparisons to prior year quarter).

         "The  Principal  continued to deliver  strong  performance in the third
quarter,"  said J.  Barry  Griswell,  chairman,  president  and chief  executive
officer.  "Importantly,  our record  operating  earnings  position us in 2004 to
exceed our long-term EPS growth target of 11 to 13 percent per year."
         "Assets  under  management  and  account  values are key drivers of our
earnings growth, and in spite of equity market declines, both are up more than 7
percent  from  year-end  2003.  Principal  Global  Investors  continues  to have
tremendous   success  winning  new   third-party   investment   mandates,   with
institutional  assets  under  management  increasing  18  percent,  or nearly $5


                                       3
<PAGE>

billion over the first three quarters.  Full service  accumulation  sales remain
strong  and are  again on track to  exceed  $5  billion  for  2004.  The  bigger
contributor  to deposit  growth and  therefore  net cash flow and account  value
growth,  however,  is the ongoing inflow of  contributions  from retirement plan
investors," said Griswell.  "These customer deposits are up more than 24 percent
year-to-date, and expected to approach $8 billion for the year. Continued strong
growth reflects the power of payroll deduction,  as well as outstanding employer
level retention,  award-winning  participant services, and a concerted effort to
encourage greater employee participation and higher salary deferrals."

         For the nine months ended September 30, 2004:

o    Net income increased to $612.1 million, or $1.92 per diluted share compared
     to $542.4  million,  or $1.66 per diluted  share,  during the same period a
     year ago.

o    Operating  earnings  increased  17 percent to $565.1  million,  compared to
     $484.6 million in the year earlier period.

o    Operating  earnings  per share  increased  20 percent to $1.78 per  diluted
     share compared to $1.48 per diluted share in the year earlier period.

o    Operating  revenues  increased 5 percent to $6,202.9  million from $5,915.4
     million during the same period a year ago.

                               SEGMENT HIGHLIGHTS

U.S. ASSET MANAGEMENT AND ACCUMULATION
         Segment operating  earnings for third quarter 2004 increased 14 percent
to a record $123.5  million,  compared to $107.9  million for the same period in
2003, primarily reflecting strong results in pension full service  accumulation.
Full service  accumulation  delivered a record $57.2  million of earnings,  a 24
percent increase compared to $46.0 million in the prior year quarter,  primarily
reflecting 19 percent growth in mean account value,  as well as slightly  higher
prepayment fee income in third quarter 2004.
         At $28.4 million,  pension  investment  only earnings  improved by $2.5
million  compared to a year ago, but excluding  higher  prepayment fee income in
third quarter 2004, earnings would have been down slightly. Pension full service
payout  earnings  declined by $2.0 million to $13.4 million,  in spite of higher
prepayment  fee income in third quarter 2004,  primarily  reflecting  normal but
unfavorable mortality experience.  Excluding the impact on operating earnings of
approximately  $6 million due to higher  prepayment  fee income in third quarter
2004, segment earnings would have increased 9 percent.
         Operating  revenues for the third quarter  increased to $931.3  million
compared to $864.8 million for the same period in 2003,  primarily the result of
increased  fees  within the full  service  accumulation  operations,  reflecting
growth in account values.
         Segment  assets under  management  continued  to  increase,  reaching a
record  $132.1  billion as of September  30, 2004, an increase of 4 percent from
$127.6  billion as of June 30,  2004,  and an increase of 20 percent from $110.4
billion as of September 30, 2003. Net cash flows from  retirement plan investors
were $1.8 billion and $3.9 billion for the three and nine months ended September
30, 2004, respectively,  including $1.2 billion and $3.1 billion,  respectively,
for full service accumulation.

                                       4
<PAGE>

INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION
         Segment  operating  earnings for third quarter 2004 were $10.9 million,
compared to $7.8 million for the same period in 2003. The increase was primarily
the result of $2.7 million of tax adjustments with no corresponding  activity in
the year earlier period.
         Operating revenues were $136.0 million for third quarter 2004, compared
to $98.3 million for the same period last year. The increase  primarily reflects
operations in Chile,  which reported  record annuity sales, as well as increased
investment income due to inflation.
         Assets  under  management  for the  segment  were  $9.1  billion  as of
September 30, 2004,  compared to $8.3 billion as of June 30, 2004,  and compared
to $6.9 billion as of September 30, 2003.

LIFE AND HEALTH INSURANCE
         Segment  operating  earnings for third quarter 2004 were $71.6 million,
compared to $52.8  million for the same period in 2003.  The  increase  reflects
record  earnings in the Health  division,  which  includes the benefit of a $7.0
million adjustment due to a reserve refinement.  Segment operating earnings also
benefited from a $3.6 million reserve release in the group  disability  business
within the Specialty Benefits division.
         Operating revenues increased to $1,051.8 million for the third quarter,
compared to $995.7  million for the same period in 2003,  largely as a result of
increases within the Health and Specialty Benefits insurance  divisions.  In the
Health  division,  rate  increases  more than offset a slight decline in average
covered medical members. In addition,  fee revenues increased,  primarily due to
revenues  generated from our 2004 acquisition of the Molloy Companies  (wellness
and  claims  administration).  In  the  Specialty  Benefits  division,  revenues
increased  due to  improving  sales  and  retention  in each  of the  division's
business lines.  Operating  revenues  increased  slightly in the Individual Life
division,  as  higher  revenues  from  fee-based  universal  life  and  variable
universal  life  products  more than  offset  lower  revenues  from  traditional
premium-based products,  reflecting the company's shift in marketing emphasis to
fee-based products.  Unlike traditional  premium-based products,  universal life
and variable universal life deposits are not reported as GAAP revenue.

MORTGAGE BANKING
         The operating  earnings of the segment,  prior to the July 1, 2004 sale
of the mortgage banking operations, reflect only the corporate overhead expenses
allocated to the segment.  This is pursuant to Statement of Financial Accounting
Standard No. 144, ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS
("SFAS 144"),  whereby all revenues and expenses  (excluding  corporate overhead
allocated to the discontinued segment) are reported as discontinued  operations.
Based on this  treatment,  there were no  operating  earnings for the segment in
third quarter 2004,  compared to an operating  loss of $5.0 million in the prior
year quarter.

                                       5
<PAGE>

CORPORATE AND OTHER
         Operating losses for third quarter 2004 were $0.8 million,  compared to
operating  earnings of $3.8  million  for the same  period in 2003.  Because the
corporate operations are varied, many items contributed to the variance. Reduced
commercial mortgage loan prepayment fee income compared to unusually high income
from this  source in the year  earlier  period was the main  contributor  to the
variance.  Segment  results for third quarter 2004 were  positively  impacted by
favorable tax adjustments of $5.2 million.

FORWARD LOOKING AND CAUTIONARY STATEMENTS
This press  release  contains  forward-looking  statements,  including,  without
limitation,  statements  as to sales  targets,  sales and earnings  trends,  and
management's  beliefs,  expectations,  goals and opinions.  These statements are
based  on  a  number  of  assumptions  concerning  future  conditions  that  may
ultimately  prove to be  inaccurate.  Future  events  and their  effects  on the
company may not be those  anticipated,  and actual results may differ materially
from the results  anticipated in these  forward-looking  statements.  The risks,
uncertainties  and  factors  that could  cause or  contribute  to such  material
differences  are discussed in the  company's  annual report on Form 10-K for the
year ended December 31, 2003, and in the company's quarterly report on Form 10-Q
for the quarter  ended June 30, 2004,  filed by the company with the  Securities
and  Exchange  Commission.   These  risks  and  uncertainties  include,  without
limitation:  competitive factors;  volatility of financial markets;  decrease in
ratings;   interest  rate  changes;   inability  to  attract  and  retain  sales
representatives;  international  business risks;  foreign currency exchange rate
fluctuations; and investment portfolio risks.

BROKER COMPENSATION ISSUES
Regarding  the current  issues  related to  compensation  of insurance  brokers,
specifically  the  New  York  Attorney  General's  investigation  of  contingent
commissions  and  bid-rigging:

o    The Principal has not received any subpoena on this matter.
o    The company is conducting a thorough internal review to ensure policies are
     being adhered to by employees.
o    "Bid-rigging"  is a fraudulent  practice and not tolerated by The Principal
     in any form.
o    Through  this stage of the  review,  the  company  has not  identified  any
     instances of bid-rigging.
o    The Principal does pay  compensation  in some  situations  based on factors
     including volume, profitability,  and persistency, and is therefore closely
     monitoring legal and regulatory developments around contingent compensation
     arrangements, as well as developments in industry practice.

OUTLOOK FOR FULL YEAR 20052
Based on an estimated  $50 million in 2005 for net  realized/unrealized  capital
losses,  the  company  expects  2005 net income to range from $2.43 to $2.55 per
diluted share.  The company expects 2005 operating  earnings to range from $2.60
to $2.72 per diluted share.3

SHAREHOLDER DIVIDEND
As  announced on October 22,  2004,  the Board of  Directors  declared an annual
dividend of $0.55 per share,  payable on December 17, 2004, to  shareholders  of
record as of November 12, 2004.

SHARE REPURCHASES
In May 2004,  concurrent  with our  announcement  to sell the  mortgage  banking
operations,  the  Board  authorized  a share  repurchase  program  of up to $700
million.  During the quarter,  the company  repurchased  8.2 million  shares for

                                       6
<PAGE>

$283.5 million,  an average price per share of $34.43. As of September 30, 2004,
under this program the company has  repurchased  10.4 million  shares for $358.5
million, for an average price of $34.59.

STOCK OPTIONS
The Principal  expenses  employee  stock options and the employee stock purchase
plan,  resulting  in an  after-tax  expense of $5.4  million and $16.8  million,
respectively for the three and nine months ended September 30, 2004, compared to
$3.3 million and $10.7 million, respectively for the three and nine months ended
September 30, 2003.

EARNINGS CONFERENCE CALL
At 9:00 A.M. (CST) tomorrow,  Chairman,  President and CEO J. Barry Griswell and
Executive  Vice  President  and CFO Mike Gersie will lead a discussion  during a
live  conference  call.  Parties  interested in listening to the conference call
live may access the webcast on the Principal  Financial Group Investor Relations
(IR) website (www.principal.com/investor) or 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.  To access the call,  leader name is Tom
Graf.  Listeners can access an audio replay of the call on the IR website, or by
calling   (800)   642-1687   (US  and  Canadian   callers)  or  (706)   645-9291
(International callers). The access code for the replay is 1100874. Replays will
be available  through  November 9, 2004.  The financial  supplement is currently
available on our website and will be referred to during the conference call.

ABOUT THE PRINCIPAL FINANCIAL GROUP
The Principal  Financial  Group(R) (The Principal  (R))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 $156.0
billion in assets  under  management5  and serves  some 14.7  million  customers
worldwide from offices in Asia, Australia,  Europe, Latin America and the United
States. Principal Financial Group, Inc. is traded on the New York Stock Exchange
under the ticker symbol PFG. For more information, visit WWW.PRINCIPAL.COM.

                                       ###


                                       7
<PAGE>

<TABLE>
<CAPTION>
SUMMARY OF SEGMENT AND PRINCIPAL FINANCIAL GROUP, INC. RESULTS

                                                                OPERATING EARNINGS (LOSS)* IN MILLIONS
                                                          THREE MONTHS ENDED,            NINE MONTHS ENDED,
                                                     --------------- -------------- -------------- ---------------
                                            SEGMENT     9/30/04         9/30/03        9/30/04        9/30/03
---------------------------------------------------- --------------- -------------- -------------- ---------------
<S>                                                          <C>            <C>            <C>             <C>
             U.S. ASSET MANAGEMENT AND ACCUMULATION          $123.5         $107.9         $364.7          $308.5
    INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION            10.9            7.8           28.8            26.3
                          LIFE AND HEALTH INSURANCE            71.6           52.8          203.3           174.8
                                   MORTGAGE BANKING               -           (5.0)         (10.3)          (13.4)
                                CORPORATE AND OTHER           (0.8)            3.8          (21.4)          (11.6)
                                 OPERATING EARNINGS           205.2          167.3          565.1           484.6
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS( LOSSES), AS ADJUSTED          (10.6)            1.4          (78.2)          (65.2)
                        OTHER AFTER-TAX ADJUSTMENTS           104.2           15.8          125.2           123.0
                                         NET INCOME          $298.8         $184.5         $612.1          $542.4


                                                                       PER DILUTED SHARE
                                                     ------------------------------ ------------------------------
                                                          THREE MONTHS ENDED,            NINE MONTHS ENDED,
                                                        9/30/04         9/30/03        9/30/04        9/30/03
                                                     --------------- -------------- -------------- ---------------
                                 OPERATING EARNINGS      $0.66           $ 0.52          $ 1.78        $ 1.48
                    NET REALIZED/UNREALIZED CAPITAL
                                LOSSES, AS ADJUSTED      (0.03)            -              (0.25)        (0.20)
                        OTHER AFTER-TAX ADJUSTMENTS       0.32             0.05            0.39          0.38
                                         NET INCOME      $0.95           $ 0.57          $ 1.92        $ 1.66
        WEIGHTED-AVERAGE DILUTED SHARES OUTSTANDING
                                                         313.0           324.1           318.0         327.7
</TABLE>

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

                                       8
<PAGE>

<TABLE>
<CAPTION>
                         PRINCIPAL FINANCIAL GROUP, INC.
                              RESULTS OF OPERATIONS
                                  (IN MILLIONS)
                                                 -------------------------------- -------------------------------
                                                       THREE MONTHS ENDED               NINE MONTHS ENDED
                                                 ---------------- --------------- --------------- ---------------
                                                     9/30/04         9/30/03         9/30/04         9/30/03
                                                 ---------------- --------------- --------------- ---------------
   <S>                                                    <C>           <C>            <C>             <C>
   Premiums and other considerations                      $923.8        $  867.8       $ 2,736.8       $ 2,648.2
   Fees and other revenues                                 363.6           289.3         1,060.4           832.6
   Net investment income                                   822.5           821.4         2,397.9         2,423.2
   Net realized/unrealized capital losses                 (21.3)           (6.4)         (130.1)          (90.6)
                                                 ---------------- --------------- --------------- ---------------
   TOTAL REVENUES                                        2,088.6         1,972.1         6,065.0         5,813.4
                                                 ---------------- --------------- --------------- ---------------
   Benefits, claims, and settlement expenses             1,238.0         1,174.4         3,645.2         3,554.3
   Dividends to policyholders                               72.0            78.7           219.7           232.7
   Operating expenses                                      543.3           494.5         1,593.9         1,470.1
                                                 ---------------- --------------- --------------- ---------------
   TOTAL EXPENSES                                        1,853.3         1,747.6         5,458.8         5,257.1
                                                 ---------------- --------------- --------------- ---------------
   Income from continuing operations before
        income taxes                                       235.3           224.5           606.2           556.3
   Income taxes                                             40.7            55.8           119.3           136.9
                                                 ---------------- --------------- --------------- ---------------
   Income from continuing operations, net of
        related income taxes                               194.6           168.7           486.9           419.4
   Income from discontinued operations, net of
        related taxes                                      104.2            19.2           130.9           126.4
                                                 ---------------- --------------- --------------- ---------------
   Income before cumulative effect of
        accounting changes                                 298.8           187.9           617.8           545.8
   Cumulative effect of accounting changes,
        net of related income taxes                            -           (3.4)            (5.7)           (3.4)
                                                 ---------------- --------------- --------------- ---------------
   NET INCOME                                             $298.8        $  184.5       $   612.1       $   542.4
   Less:
   Net realized/unrealized capital gains
        (losses), as adjusted                              (10.6)            1.4           (78.2)          (65.2)
   Other after-tax adjustments                             104.2            15.8           125.2           123.0
                                                 ---------------- --------------- --------------- ---------------
   OPERATING EARNINGS                                     $205.2        $  167.3       $   565.1       $   484.6
                                                 ================ =============== =============== ===============
</TABLE>


<TABLE>
<CAPTION>
                        SELECTED BALANCE SHEET STATISTICS

                                                                              PERIOD ENDED
                                                        --------------------- -------------------- --------------
                                                           9/30/04              12/31/03            9/30/03
                                                        --------------------- -------------------- --------------
  <S>                                                      <C>                  <C>                 <C>
  Total assets (in billions)                               $   109.8            $   107.8           $   103.7
  Total equity (in millions)                               $ 7,694.4            $ 7,399.6           $ 7,436.3
  Total equity excluding accumulated other
      comprehensive income (in millions)                   $ 6,412.2            $ 6,228.3           $ 6,233.9
  End of period shares outstanding (in millions)               307.0                320.7               322.8
  Book value per share                                     $    25.06           $    23.07          $    23.04
  Book value per share excluding accumulated other
      comprehensive income                                 $    20.89           $    19.42          $    19.31

</TABLE>

                                       9
<PAGE>

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


<TABLE>
<CAPTION>
                                                                    THREE MONTHS ENDED            NINE MONTHS ENDED
                                                             ----------------------------- -----------------------------
                                                                  9/30/04        9/30/03       9/30/04       9/30/03
                                                             -------------- -------------- ------------- ---------------
<S>                                                                   <C>            <C>           <C>           <C>
DILUTED EARNINGS PER SHARE:
Operating Earnings                                                    0.66           0.52          1.78          1.48
Net realized/unrealized capital losses                               (0.03)          -            (0.25)        (0.20)
Other after-tax adjustments                                           0.32           0.05          0.39          0.38
                                                             -------------- -------------- ------------- ---------------
Net income                                                            0.95           0.57          1.92          1.66
                                                             ============== ============== ============= ===============
BOOK VALUE EXCLUDING OTHER COMPREHENSIVE INCOME:
Book value excluding other comprehensive income                      20.89          19.31         20.89         19.31
Net unrealized capital gains                                          4.58           4.19          4.58          4.19
Foreign currency translation                                         (0.41)         (0.46)        (0.41)        (0.46)
                                                             -------------- -------------- ------------- ---------------
Book value including other comprehensive income                      25.06          23.04         25.06         23.04
                                                             ============== ============== ============= ===============
OPERATING REVENUES:
USAMA                                                               931.3          864.8       2,731.4       2,606.7
IAMA                                                                136.0           98.3         371.3         279.0
Life and Health                                                   1,051.8          995.7       3,117.8       3,009.8
Mortgage Banking                                                      -              -             -             -
Corporate and Other                                                  (7.3)          18.9        (17.6)          19.9
                                                             -------------- -------------- ------------- ---------------
Total operating revenues                                          2,111.8        1,977.7       6,202.9       5,915.4
Net realized/unrealized capital losses and related fee
     adjustments                                                    (23.2)          (5.6)       (137.9)       (102.0)
                                                             -------------- -------------- ------------- ---------------
Total GAAP revenues                                               2,088.6        1,972.1       6,065.0       5,813.4
                                                             ============== ============== ============= ===============
OPERATING EARNINGS:
USAMA                                                               123.5          107.9         364.7         308.5
IAMA                                                                 10.9            7.8          28.8          26.3
Life and Health                                                      71.6           52.8         203.3         174.8
Mortgage Banking                                                      -             (5.0)        (10.3)        (13.4)
Corporate and Other                                                  (0.8)           3.8         (21.4)        (11.6)
                                                             -------------- -------------- ------------- ---------------
Total operating earnings                                            205.2          167.3         565.1         484.6
Net realized/unrealized capital gains (losses)                      (10.6)           1.4         (78.2)        (65.2)
Other after-tax adjustments                                         104.2           15.8         125.2         123.0
                                                             -------------- -------------- ------------- ---------------
Net income                                                          298.8          184.5         612.1         542.4
                                                             ============== ============== ============= ===============
NET REALIZED/UNREALIZED CAPITAL GAINS (LOSSES):
Net realized/unrealized capital gains (losses), as adjusted         (10.6)           1.4         (78.2)        (65.2)
Add:
Amortization of DPAC and sale inducement costs                        0.6            0.3          (2.0)         (3.0)
Capital gains distributed                                             0.1            1.0           1.3           2.0
Tax impacts                                                         (13.4)          (8.2)        (59.3)        (35.4)
Minority interest capital gains (losses)                              0.1           (0.1)          0.3          (0.4)
Less related fee adjustments:
Unearned front-end fee income                                         -              0.8          (0.1)          5.1
Certain market value adjustments to fee revenues                     (1.9)           -            (7.7)        (16.5)
                                                             -------------- -------------- ------------- ---------------
GAAP net realized/unrealized capital losses                         (21.3)          (6.4)       (130.1)        (90.6)
                                                             ============== ============== ============= ===============
OTHER AFTER TAX ADJUSTMENTS:
SOP 03-1 implementation                                               -              -            (5.7)          -
FIN 46 implementation                                                 -             (3.4)          -            (3.4)
Discontinued operations - Mortgage Banking                           94.1            6.2         120.6         117.1
Discontinued operations - Argentina                                  10.1            0.6          10.3          (2.0)
Discontinued operations - BT Financial Group                          -             12.4           -            11.3
                                                             -------------- -------------- ------------- ---------------
Total other after-tax adjustments                                   104.2           15.8         125.2         123.0
                                                             ============== ============== ============= ===============

</TABLE>

                                       10
<PAGE>

---------------
1    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
     financial  measures to the most directly  comparable  U.S.  GAAP  financial
     measure at the end of the release.  The company adjusts U.S. GAAP financial
     measures for items not directly related to ongoing operations.  However, it
     is possible these adjusting items have occurred in the past and could recur
     in the future.  Management also uses non-GAAP  financial  measures for goal
     setting,   determining   employee   and   senior   management   awards  and
     compensation, and evaluating performance on a basis comparable to that used
     by investors and securities analysts.

2    As announced  with first quarter 2004 results,  the Company has changed its
     policy on providing earnings guidance. The Company will continue to provide
     full year  operating  earnings per share  guidance and net income per share
     guidance,  but will no longer provide any quarterly  operating earnings per
     share guidance or net income per share  guidance,  or quarterly  updates to
     full year  expectations as the year  progresses.  The Company will continue
     providing   investors   with   information   and  insight  into   strategic
     initiatives, growth and value drivers, and trend and industry data critical
     to understanding the Company's businesses and operating environment.

3    Full year 2005 guidance is based on certain assumptions, including domestic
     equity  market  performance  improvement  of roughly 2% per quarter.  Other
     items that we are unable to predict could  significantly  affect net income
     such as changes to laws, regulations, or accounting standards,  litigation,
     or gains or losses from discontinued operations.

4    "The Principal  Financial  Group(R)" and "The  Principal(R)" are registered
     service  marks of  Principal  Financial  Services,  Inc.,  a member  of the
     Principal Financial Group.

5    As of September 30, 2004.

                                       11
<PAGE>
[{"type": "8-K", "sequence": "1", "filename": "final3rdqtrrelease.txt", "description": "FORM 8-K", "secsgml_size_bytes": 38421}]
{"company-data": {"conformed-name": "PRINCIPAL FINANCIAL GROUP INC", "cik": "0001126328", "assigned-sic": "6321", "irs-number": "421520346", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-16725", "film-number": "041111714"}, "business-address": {"street1": "711 HIGH STREET", "city": "DES MOINES", "state": "IA", "zip": "50392", "phone": "5152475111"}}
SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                    FORM 8-K

                                 CURRENT REPORT

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

                        Date of Report: NOVEMBER 1, 2004
                        (Date of earliest event reported)

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

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

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

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

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

Check  the  appropriate  box  below  if the  Form  8-K  filing  is  intended  to
simultaneously  satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
    (17 CFR 230.425)
[ ] Soliciting  material pursuant to Rule 14a-12 under the Exchange Act
    (17 CFR 240.14a-12)
[ ] Pre-commencement  communications pursuant to Rule 14d-2(b) under the
    Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
    Exchange Act (17 CFR 240.13e-4(c))

                               ------------------
ITEM 2.O2  RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On November 1,  2004, Principal Financial Group, Inc. publicly announced
information  regarding its results of operations and financial condition for the
quarter  ended  September  30, 2004.  The text of the  announcement  is included
herewith as Exhibit 99.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

99    Third Quarter 2004 Earnings Release

                                    SIGNATURE

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

                                    PRINCIPAL FINANCIAL GROUP, INC.

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

Date:  November 2, 2004

                                       2
RELEASE: On receipt
MEDIA CONTACT:                              Jeff Rader, 515-247-7883,
                                            rader.jeff@principal.com
INVESTOR RELATIONS CONTACT:                 TOM GRAF, 515-235-9500, INVESTOR-
                                            RELATIONS@PRINCIPAL.COM

       PRINCIPAL FINANCIAL GROUP, INC. REPORTS THIRD QUARTER 2004 RESULTS

         Des Moines,  IA (November 1, 2004) -- Principal  Financial Group,  Inc.
(NYSE:  PFG) today  announced  record  quarterly net income for the three months
ended  September  30,  2004,  of $298.8  million,  or $0.95 per  diluted  share,
compared to net income of $184.5  million,  or $0.57 per  diluted  share for the
three months ended September 30, 2003.  Third quarter 2004 net income includes a
$94.1 million after-tax gain (reported as discontinued operations) from the sale
of the mortgage  banking  business,  which was  completed  on July 1, 2004.  The
company reported record quarterly operating earnings of $205.2 million for third
quarter  2004,  compared to $167.3  million for third  quarter  2003.  Operating
earnings per diluted share (EPS) for third  quarter 2004 were $0.66  compared to
$0.52 for the same period in 2003.  Operating  revenues  for third  quarter 2004
were  $2,111.8  million  compared to  $1,977.7  million for the same period last
year.1

     Additional highlights for third quarter 2004 include:

o    Record assets under management of $156.0 billion,  up $21.2 billion,  or 16
     percent  from a year  ago,  including  20  percent  growth  for U.S.  Asset
     Management and Accumulation,  and 31 percent growth for International Asset
     Management and Accumulation.
o    Record  operating  earnings of $123.5 million for U.S. Asset Management and
     Accumulation, including a record $57.2 million of earnings for Pension Full
     Service  Accumulation  (full  service  accumulation),  which  increased  24
     percent over the prior year quarter.
o    Record full service  accumulation  account values of $60.0  billion,  up 18
     percent,  record full service accumulation deposits (excluding M&A) of $3.4
     billion, up 21 percent,  and strong full service accumulation sales of $1.3
     billion (all organic), up 13 percent (comparisons to prior year quarter).

         "The  Principal  continued to deliver  strong  performance in the third
quarter,"  said J.  Barry  Griswell,  chairman,  president  and chief  executive
officer.  "Importantly,  our record  operating  earnings  position us in 2004 to
exceed our long-term EPS growth target of 11 to 13 percent per year."
         "Assets  under  management  and  account  values are key drivers of our
earnings growth, and in spite of equity market declines, both are up more than 7
percent  from  year-end  2003.  Principal  Global  Investors  continues  to have
tremendous   success  winning  new   third-party   investment   mandates,   with
institutional  assets  under  management  increasing  18  percent,  or nearly $5

                                       3
billion over the first three quarters.  Full service  accumulation  sales remain
strong  and are  again on track to  exceed  $5  billion  for  2004.  The  bigger
contributor  to deposit  growth and  therefore  net cash flow and account  value
growth,  however,  is the ongoing inflow of  contributions  from retirement plan
investors," said Griswell.  "These customer deposits are up more than 24 percent
year-to-date, and expected to approach $8 billion for the year. Continued strong
growth reflects the power of payroll deduction,  as well as outstanding employer
level retention,  award-winning  participant services, and a concerted effort to
encourage greater employee participation and higher salary deferrals."

         For the nine months ended September 30, 2004:

o    Net income increased to $612.1 million, or $1.92 per diluted share compared
     to $542.4  million,  or $1.66 per diluted  share,  during the same period a
     year ago.

o    Operating  earnings  increased  17 percent to $565.1  million,  compared to
     $484.6 million in the year earlier period.

o    Operating  earnings  per share  increased  20 percent to $1.78 per  diluted
     share compared to $1.48 per diluted share in the year earlier period.

o    Operating  revenues  increased 5 percent to $6,202.9  million from $5,915.4
     million during the same period a year ago.

                               SEGMENT HIGHLIGHTS

U.S. ASSET MANAGEMENT AND ACCUMULATION
         Segment operating  earnings for third quarter 2004 increased 14 percent
to a record $123.5  million,  compared to $107.9  million for the same period in
2003, primarily reflecting strong results in pension full service  accumulation.
Full service  accumulation  delivered a record $57.2  million of earnings,  a 24
percent increase compared to $46.0 million in the prior year quarter,  primarily
reflecting 19 percent growth in mean account value,  as well as slightly  higher
prepayment fee income in third quarter 2004.
         At $28.4 million,  pension  investment  only earnings  improved by $2.5
million  compared to a year ago, but excluding  higher  prepayment fee income in
third quarter 2004, earnings would have been down slightly. Pension full service
payout  earnings  declined by $2.0 million to $13.4 million,  in spite of higher
prepayment  fee income in third quarter 2004,  primarily  reflecting  normal but
unfavorable mortality experience.  Excluding the impact on operating earnings of
approximately  $6 million due to higher  prepayment  fee income in third quarter
2004, segment earnings would have increased 9 percent.
         Operating  revenues for the third quarter  increased to $931.3  million
compared to $864.8 million for the same period in 2003,  primarily the result of
increased  fees  within the full  service  accumulation  operations,  reflecting
growth in account values.
         Segment  assets under  management  continued  to  increase,  reaching a
record  $132.1  billion as of September  30, 2004, an increase of 4 percent from
$127.6  billion as of June 30,  2004,  and an increase of 20 percent from $110.4
billion as of September 30, 2003. Net cash flows from  retirement plan investors
were $1.8 billion and $3.9 billion for the three and nine months ended September
30, 2004, respectively,  including $1.2 billion and $3.1 billion,  respectively,
for full service accumulation.

                                       4
INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION
         Segment  operating  earnings for third quarter 2004 were $10.9 million,
compared to $7.8 million for the same period in 2003. The increase was primarily
the result of $2.7 million of tax adjustments with no corresponding  activity in
the year earlier period.
         Operating revenues were $136.0 million for third quarter 2004, compared
to $98.3 million for the same period last year. The increase  primarily reflects
operations in Chile,  which reported  record annuity sales, as well as increased
investment income due to inflation.
         Assets  under  management  for the  segment  were  $9.1  billion  as of
September 30, 2004,  compared to $8.3 billion as of June 30, 2004,  and compared
to $6.9 billion as of September 30, 2003.

LIFE AND HEALTH INSURANCE
         Segment  operating  earnings for third quarter 2004 were $71.6 million,
compared to $52.8  million for the same period in 2003.  The  increase  reflects
record  earnings in the Health  division,  which  includes the benefit of a $7.0
million adjustment due to a reserve refinement.  Segment operating earnings also
benefited from a $3.6 million reserve release in the group  disability  business
within the Specialty Benefits division.
         Operating revenues increased to $1,051.8 million for the third quarter,
compared to $995.7  million for the same period in 2003,  largely as a result of
increases within the Health and Specialty Benefits insurance  divisions.  In the
Health  division,  rate  increases  more than offset a slight decline in average
covered medical members. In addition,  fee revenues increased,  primarily due to
revenues  generated from our 2004 acquisition of the Molloy Companies  (wellness
and  claims  administration).  In  the  Specialty  Benefits  division,  revenues
increased  due to  improving  sales  and  retention  in each  of the  division's
business lines.  Operating  revenues  increased  slightly in the Individual Life
division,  as  higher  revenues  from  fee-based  universal  life  and  variable
universal  life  products  more than  offset  lower  revenues  from  traditional
premium-based products,  reflecting the company's shift in marketing emphasis to
fee-based products.  Unlike traditional  premium-based products,  universal life
and variable universal life deposits are not reported as GAAP revenue.

MORTGAGE BANKING
         The operating  earnings of the segment,  prior to the July 1, 2004 sale
of the mortgage banking operations, reflect only the corporate overhead expenses
allocated to the segment.  This is pursuant to Statement of Financial Accounting
Standard No. 144, ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS
("SFAS 144"),  whereby all revenues and expenses  (excluding  corporate overhead
allocated to the discontinued segment) are reported as discontinued  operations.
Based on this  treatment,  there were no  operating  earnings for the segment in
third quarter 2004,  compared to an operating  loss of $5.0 million in the prior
year quarter.

                                       5
CORPORATE AND OTHER
         Operating losses for third quarter 2004 were $0.8 million,  compared to
operating  earnings of $3.8  million  for the same  period in 2003.  Because the
corporate operations are varied, many items contributed to the variance. Reduced
commercial mortgage loan prepayment fee income compared to unusually high income
from this  source in the year  earlier  period was the main  contributor  to the
variance.  Segment  results for third quarter 2004 were  positively  impacted by
favorable tax adjustments of $5.2 million.

FORWARD LOOKING AND CAUTIONARY STATEMENTS
This press  release  contains  forward-looking  statements,  including,  without
limitation,  statements  as to sales  targets,  sales and earnings  trends,  and
management's  beliefs,  expectations,  goals and opinions.  These statements are
based  on  a  number  of  assumptions  concerning  future  conditions  that  may
ultimately  prove to be  inaccurate.  Future  events  and their  effects  on the
company may not be those  anticipated,  and actual results may differ materially
from the results  anticipated in these  forward-looking  statements.  The risks,
uncertainties  and  factors  that could  cause or  contribute  to such  material
differences  are discussed in the  company's  annual report on Form 10-K for the
year ended December 31, 2003, and in the company's quarterly report on Form 10-Q
for the quarter  ended June 30, 2004,  filed by the company with the  Securities
and  Exchange  Commission.   These  risks  and  uncertainties  include,  without
limitation:  competitive factors;  volatility of financial markets;  decrease in
ratings;   interest  rate  changes;   inability  to  attract  and  retain  sales
representatives;  international  business risks;  foreign currency exchange rate
fluctuations; and investment portfolio risks.

BROKER COMPENSATION ISSUES
Regarding  the current  issues  related to  compensation  of insurance  brokers,
specifically  the  New  York  Attorney  General's  investigation  of  contingent
commissions  and  bid-rigging:

o    The Principal has not received any subpoena on this matter.
o    The company is conducting a thorough internal review to ensure policies are
     being adhered to by employees.
o    "Bid-rigging"  is a fraudulent  practice and not tolerated by The Principal
     in any form.
o    Through  this stage of the  review,  the  company  has not  identified  any
     instances of bid-rigging.
o    The Principal does pay  compensation  in some  situations  based on factors
     including volume, profitability,  and persistency, and is therefore closely
     monitoring legal and regulatory developments around contingent compensation
     arrangements, as well as developments in industry practice.

OUTLOOK FOR FULL YEAR 20052
Based on an estimated  $50 million in 2005 for net  realized/unrealized  capital
losses,  the  company  expects  2005 net income to range from $2.43 to $2.55 per
diluted share.  The company expects 2005 operating  earnings to range from $2.60
to $2.72 per diluted share.3

SHAREHOLDER DIVIDEND
As  announced on October 22,  2004,  the Board of  Directors  declared an annual
dividend of $0.55 per share,  payable on December 17, 2004, to  shareholders  of
record as of November 12, 2004.

SHARE REPURCHASES
In May 2004,  concurrent  with our  announcement  to sell the  mortgage  banking
operations,  the  Board  authorized  a share  repurchase  program  of up to $700
million.  During the quarter,  the company  repurchased  8.2 million  shares for

                                       6
$283.5 million,  an average price per share of $34.43. As of September 30, 2004,
under this program the company has  repurchased  10.4 million  shares for $358.5
million, for an average price of $34.59.

STOCK OPTIONS
The Principal  expenses  employee  stock options and the employee stock purchase
plan,  resulting  in an  after-tax  expense of $5.4  million and $16.8  million,
respectively for the three and nine months ended September 30, 2004, compared to
$3.3 million and $10.7 million, respectively for the three and nine months ended
September 30, 2003.

EARNINGS CONFERENCE CALL
At 9:00 A.M. (CST) tomorrow,  Chairman,  President and CEO J. Barry Griswell and
Executive  Vice  President  and CFO Mike Gersie will lead a discussion  during a
live  conference  call.  Parties  interested in listening to the conference call
live may access the webcast on the Principal  Financial Group Investor Relations
(IR) website (www.principal.com/investor) or 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.  To access the call,  leader name is Tom
Graf.  Listeners can access an audio replay of the call on the IR website, or by
calling   (800)   642-1687   (US  and  Canadian   callers)  or  (706)   645-9291
(International callers). The access code for the replay is 1100874. Replays will
be available  through  November 9, 2004.  The financial  supplement is currently
available on our website and will be referred to during the conference call.

ABOUT THE PRINCIPAL FINANCIAL GROUP
The Principal  Financial  Group(R) (The Principal  (R))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 $156.0
billion in assets  under  management5  and serves  some 14.7  million  customers
worldwide from offices in Asia, Australia,  Europe, Latin America and the United
States. Principal Financial Group, Inc. is traded on the New York Stock Exchange
under the ticker symbol PFG. For more information, visit WWW.PRINCIPAL.COM.

                                       ###

                                       7
SUMMARY OF SEGMENT AND PRINCIPAL FINANCIAL GROUP, INC. RESULTS

                                                                OPERATING EARNINGS (LOSS)* IN MILLIONS
                                                          THREE MONTHS ENDED,            NINE MONTHS ENDED,
                                                     --------------- -------------- -------------- ---------------
                                            SEGMENT     9/30/04         9/30/03        9/30/04        9/30/03
---------------------------------------------------- --------------- -------------- -------------- ---------------
U.S. ASSET MANAGEMENT AND ACCUMULATION          $123.5         $107.9         $364.7          $308.5
    INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION            10.9            7.8           28.8            26.3
                          LIFE AND HEALTH INSURANCE            71.6           52.8          203.3           174.8
                                   MORTGAGE BANKING               -           (5.0)         (10.3)          (13.4)
                                CORPORATE AND OTHER           (0.8)            3.8          (21.4)          (11.6)
                                 OPERATING EARNINGS           205.2          167.3          565.1           484.6
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS( LOSSES), AS ADJUSTED          (10.6)            1.4          (78.2)          (65.2)
                        OTHER AFTER-TAX ADJUSTMENTS           104.2           15.8          125.2           123.0
                                         NET INCOME          $298.8         $184.5         $612.1          $542.4

                                                                       PER DILUTED SHARE
                                                     ------------------------------ ------------------------------
                                                          THREE MONTHS ENDED,            NINE MONTHS ENDED,
                                                        9/30/04         9/30/03        9/30/04        9/30/03
                                                     --------------- -------------- -------------- ---------------
                                 OPERATING EARNINGS      $0.66           $ 0.52          $ 1.78        $ 1.48
                    NET REALIZED/UNREALIZED CAPITAL
                                LOSSES, AS ADJUSTED      (0.03)            -              (0.25)        (0.20)
                        OTHER AFTER-TAX ADJUSTMENTS       0.32             0.05            0.39          0.38
                                         NET INCOME      $0.95           $ 0.57          $ 1.92        $ 1.66
        WEIGHTED-AVERAGE DILUTED SHARES OUTSTANDING
                                                         313.0           324.1           318.0         327.7
*OPERATING EARNINGS VERSUS U.S. GAAP (GAAP) NET INCOME
Management   uses  operating   earnings,   which  excludes  the  effect  of  net
realized/unrealized  capital gains and losses, as adjusted,  and other after-tax
adjustments, for goal setting, determining employee compensation, and evaluating
performance on a basis comparable to that used by securities  analysts.  Segment
operating  earnings are  determined  by adjusting  U.S.  GAAP net income for net
realized/unrealized  capital gains and losses, as adjusted,  and other after-tax
adjustments we believe are not  indicative of overall  operating  trends.  Note:
after-tax  adjustments  have  occurred  in the past and  could  recur in  future
reporting  periods.   While  these  items  may  be  significant   components  in
understanding and assessing our consolidated financial  performance,  we believe
the presentation of segment operating earnings enhances the understanding of our
results of  operations  by  highlighting  earnings  attributable  to the normal,
ongoing operations of our businesses.

                                       8
PRINCIPAL FINANCIAL GROUP, INC.
                              RESULTS OF OPERATIONS
                                  (IN MILLIONS)
                                                 -------------------------------- -------------------------------
                                                       THREE MONTHS ENDED               NINE MONTHS ENDED
                                                 ---------------- --------------- --------------- ---------------
                                                     9/30/04         9/30/03         9/30/04         9/30/03
                                                 ---------------- --------------- --------------- ---------------
Premiums and other considerations                      $923.8        $  867.8       $ 2,736.8       $ 2,648.2
   Fees and other revenues                                 363.6           289.3         1,060.4           832.6
   Net investment income                                   822.5           821.4         2,397.9         2,423.2
   Net realized/unrealized capital losses                 (21.3)           (6.4)         (130.1)          (90.6)
                                                 ---------------- --------------- --------------- ---------------
   TOTAL REVENUES                                        2,088.6         1,972.1         6,065.0         5,813.4
                                                 ---------------- --------------- --------------- ---------------
   Benefits, claims, and settlement expenses             1,238.0         1,174.4         3,645.2         3,554.3
   Dividends to policyholders                               72.0            78.7           219.7           232.7
   Operating expenses                                      543.3           494.5         1,593.9         1,470.1
                                                 ---------------- --------------- --------------- ---------------
   TOTAL EXPENSES                                        1,853.3         1,747.6         5,458.8         5,257.1
                                                 ---------------- --------------- --------------- ---------------
   Income from continuing operations before
        income taxes                                       235.3           224.5           606.2           556.3
   Income taxes                                             40.7            55.8           119.3           136.9
                                                 ---------------- --------------- --------------- ---------------
   Income from continuing operations, net of
        related income taxes                               194.6           168.7           486.9           419.4
   Income from discontinued operations, net of
        related taxes                                      104.2            19.2           130.9           126.4
                                                 ---------------- --------------- --------------- ---------------
   Income before cumulative effect of
        accounting changes                                 298.8           187.9           617.8           545.8
   Cumulative effect of accounting changes,
        net of related income taxes                            -           (3.4)            (5.7)           (3.4)
                                                 ---------------- --------------- --------------- ---------------
   NET INCOME                                             $298.8        $  184.5       $   612.1       $   542.4
   Less:
   Net realized/unrealized capital gains
        (losses), as adjusted                              (10.6)            1.4           (78.2)          (65.2)
   Other after-tax adjustments                             104.2            15.8           125.2           123.0
                                                 ---------------- --------------- --------------- ---------------
   OPERATING EARNINGS                                     $205.2        $  167.3       $   565.1       $   484.6
                                                 ================ =============== =============== ===============
SELECTED BALANCE SHEET STATISTICS

                                                                              PERIOD ENDED
                                                        --------------------- -------------------- --------------
                                                           9/30/04              12/31/03            9/30/03
                                                        --------------------- -------------------- --------------
Total assets (in billions)                               $   109.8            $   107.8           $   103.7
  Total equity (in millions)                               $ 7,694.4            $ 7,399.6           $ 7,436.3
  Total equity excluding accumulated other
      comprehensive income (in millions)                   $ 6,412.2            $ 6,228.3           $ 6,233.9
  End of period shares outstanding (in millions)               307.0                320.7               322.8
  Book value per share                                     $    25.06           $    23.07          $    23.04
  Book value per share excluding accumulated other
      comprehensive income                                 $    20.89           $    19.42          $    19.31
9
PRINCIPAL FINANCIAL GROUP, INC.
           RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO U.S. GAAP
                       (IN MILLIONS, EXCEPT AS INDICATED)
THREE MONTHS ENDED            NINE MONTHS ENDED
                                                             ----------------------------- -----------------------------
                                                                  9/30/04        9/30/03       9/30/04       9/30/03
                                                             -------------- -------------- ------------- ---------------
DILUTED EARNINGS PER SHARE:
Operating Earnings                                                    0.66           0.52          1.78          1.48
Net realized/unrealized capital losses                               (0.03)          -            (0.25)        (0.20)
Other after-tax adjustments                                           0.32           0.05          0.39          0.38
                                                             -------------- -------------- ------------- ---------------
Net income                                                            0.95           0.57          1.92          1.66
                                                             ============== ============== ============= ===============
BOOK VALUE EXCLUDING OTHER COMPREHENSIVE INCOME:
Book value excluding other comprehensive income                      20.89          19.31         20.89         19.31
Net unrealized capital gains                                          4.58           4.19          4.58          4.19
Foreign currency translation                                         (0.41)         (0.46)        (0.41)        (0.46)
                                                             -------------- -------------- ------------- ---------------
Book value including other comprehensive income                      25.06          23.04         25.06         23.04
                                                             ============== ============== ============= ===============
OPERATING REVENUES:
USAMA                                                               931.3          864.8       2,731.4       2,606.7
IAMA                                                                136.0           98.3         371.3         279.0
Life and Health                                                   1,051.8          995.7       3,117.8       3,009.8
Mortgage Banking                                                      -              -             -             -
Corporate and Other                                                  (7.3)          18.9        (17.6)          19.9
                                                             -------------- -------------- ------------- ---------------
Total operating revenues                                          2,111.8        1,977.7       6,202.9       5,915.4
Net realized/unrealized capital losses and related fee
     adjustments                                                    (23.2)          (5.6)       (137.9)       (102.0)
                                                             -------------- -------------- ------------- ---------------
Total GAAP revenues                                               2,088.6        1,972.1       6,065.0       5,813.4
                                                             ============== ============== ============= ===============
OPERATING EARNINGS:
USAMA                                                               123.5          107.9         364.7         308.5
IAMA                                                                 10.9            7.8          28.8          26.3
Life and Health                                                      71.6           52.8         203.3         174.8
Mortgage Banking                                                      -             (5.0)        (10.3)        (13.4)
Corporate and Other                                                  (0.8)           3.8         (21.4)        (11.6)
                                                             -------------- -------------- ------------- ---------------
Total operating earnings                                            205.2          167.3         565.1         484.6
Net realized/unrealized capital gains (losses)                      (10.6)           1.4         (78.2)        (65.2)
Other after-tax adjustments                                         104.2           15.8         125.2         123.0
                                                             -------------- -------------- ------------- ---------------
Net income                                                          298.8          184.5         612.1         542.4
                                                             ============== ============== ============= ===============
NET REALIZED/UNREALIZED CAPITAL GAINS (LOSSES):
Net realized/unrealized capital gains (losses), as adjusted         (10.6)           1.4         (78.2)        (65.2)
Add:
Amortization of DPAC and sale inducement costs                        0.6            0.3          (2.0)         (3.0)
Capital gains distributed                                             0.1            1.0           1.3           2.0
Tax impacts                                                         (13.4)          (8.2)        (59.3)        (35.4)
Minority interest capital gains (losses)                              0.1           (0.1)          0.3          (0.4)
Less related fee adjustments:
Unearned front-end fee income                                         -              0.8          (0.1)          5.1
Certain market value adjustments to fee revenues                     (1.9)           -            (7.7)        (16.5)
                                                             -------------- -------------- ------------- ---------------
GAAP net realized/unrealized capital losses                         (21.3)          (6.4)       (130.1)        (90.6)
                                                             ============== ============== ============= ===============
OTHER AFTER TAX ADJUSTMENTS:
SOP 03-1 implementation                                               -              -            (5.7)          -
FIN 46 implementation                                                 -             (3.4)          -            (3.4)
Discontinued operations - Mortgage Banking                           94.1            6.2         120.6         117.1
Discontinued operations - Argentina                                  10.1            0.6          10.3          (2.0)
Discontinued operations - BT Financial Group                          -             12.4           -            11.3
                                                             -------------- -------------- ------------- ---------------
Total other after-tax adjustments                                   104.2           15.8         125.2         123.0
                                                             ============== ============== ============= ===============
10
---------------
1    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
     financial  measures to the most directly  comparable  U.S.  GAAP  financial
     measure at the end of the release.  The company adjusts U.S. GAAP financial
     measures for items not directly related to ongoing operations.  However, it
     is possible these adjusting items have occurred in the past and could recur
     in the future.  Management also uses non-GAAP  financial  measures for goal
     setting,   determining   employee   and   senior   management   awards  and
     compensation, and evaluating performance on a basis comparable to that used
     by investors and securities analysts.

2    As announced  with first quarter 2004 results,  the Company has changed its
     policy on providing earnings guidance. The Company will continue to provide
     full year  operating  earnings per share  guidance and net income per share
     guidance,  but will no longer provide any quarterly  operating earnings per
     share guidance or net income per share  guidance,  or quarterly  updates to
     full year  expectations as the year  progresses.  The Company will continue
     providing   investors   with   information   and  insight  into   strategic
     initiatives, growth and value drivers, and trend and industry data critical
     to understanding the Company's businesses and operating environment.

3    Full year 2005 guidance is based on certain assumptions, including domestic
     equity  market  performance  improvement  of roughly 2% per quarter.  Other
     items that we are unable to predict could  significantly  affect net income
     such as changes to laws, regulations, or accounting standards,  litigation,
     or gains or losses from discontinued operations.

4    "The Principal  Financial  Group(R)" and "The  Principal(R)" are registered
     service  marks of  Principal  Financial  Services,  Inc.,  a member  of the
     Principal Financial Group.

5    As of September 30, 2004.

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