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 5, 2007
                        (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 CFR240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
    Act (17 CFR240.13e-4(c))

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

                                       1
<PAGE>


ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On  February  5,  2007,  Principal  Financial  Group,  Inc.  publicly  announced
information  regarding its results of operations and financial condition for the
quarter  ended  December  31,  2006.  The text of the  announcement  is included
herewith as Exhibit 99.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

99 Fourth Quarter 2006 Earnings Release




                                    SIGNATURE

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


                                    PRINCIPAL FINANCIAL GROUP, INC.


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

Date:    February 6, 2007


                                       2
<PAGE>

                                                                      EXHIBIT 99
RELEASE: On receipt
MEDIA CONTACT:               Jeff Rader, 515-247-7883, RADER.JEFF@PRINCIPAL.COM
INVESTOR RELATIONS CONTACT:  Tom Graf, 515-235-9500,
                             investor-relations@principal.com


       PRINCIPAL FINANCIAL GROUP, INC. REPORTS FOURTH QUARTER 2006 RESULTS

Des Moines, IA (February 5, 2007) - Principal  Financial Group, Inc. (NYSE: PFG)
today announced net income available to common stockholders for the three months
ended December 31, 2006, of $284.1 million,  or $1.04 per diluted share compared
to $246.9  million,  or $0.87 per  diluted  share  for the  three  months  ended
December 31, 2005. The company reported operating earnings of $252.0 million for
fourth  quarter  2006,  compared  to $217.9  million  for fourth  quarter  2005.
Operating  earnings per diluted  share (EPS) for fourth  quarter 2006 were $0.93
compared to $0.77 for the same  period in 2005.  Operating  revenues  for fourth
quarter 2006 were a record $2,537.0 million compared to $2,481.1 million for the
same period last year.(1)

"The fourth quarter was a very strong finish for The Principal,  with 16 percent
growth in operating  earnings  contributing to a 13 percent increase in earnings
for the year," said J. Barry  Griswell,  chairman and chief  executive  officer.
"Driven by record  earnings for U.S. Asset  Management and  Accumulation,  which
improved  $107 million or 20 percent for the year,  and by  disciplined  capital
management,  the  company  delivered  19 percent  growth in  earnings  per share
compared to 2005."

"2006 marks an eighth consecutive year of record earnings for The Principal,  as
we continue to build an exceptional track record of performance," said Griswell.
"Since our IPO in 2001, we've achieved five-year  compounded annual growth of 11
percent for earnings and 17 percent for earnings per share.  We've also improved
return on equity  (ROE)(2) by 640 basis  points  since 2001,  to 15.3 percent at
year-end."

     Additional highlights for 2006 include:

     o    Record net income  available  to common  stockholders  (net income) of
          $1.03  billion,  and record net income per  diluted  share of $3.74 in
          2006.
     o    Record operating  earnings of $972.1 million,  and record EPS of $3.53
          in 2006.
     o    Record assets under management of $256.9 billion, up $61.7 billion, or
          32 percent from 2005(3).
     o    Record full service  accumulation  account values of $91.8 billion, up
          19 percent from 2005.
     o    Record  sales  of each  of the  company's  three  key  retirement  and
          investment products in 2006, including: $3.8 billion for mutual funds,
          up 12 percent; $2.5 billion for individual  annuities,  up 25 percent;
          and $7.2 billion for organic full service accumulation, up 18 percent,
          including $1.9 billion in the fourth quarter.

"Strong  results in 2006 reflect our ongoing focus on  fundamentals - innovative
retirement and employee benefits solutions,  responsive service, and exceptional
convenience, choice and value," said Griswell. "During the year, we continued to
help employers understand benefit trends and employee retention strategies,  and


                                       3
<PAGE>

to broaden our array of high quality,  cost effective benefits.  We continued to
help captive and independent  distribution alike, through new product education,
additional  needs analysis tools,  and point of sale expertise.  And we expanded
our portfolio of worksite solutions, adding an array of product offerings, tools
and personalized  guidance to help employees assess needs, evaluate options, and
execute a tailored financial plan."

"Our ongoing  investment in helping  customers  achieve  financial  security and
success  continues to drive solid retention and sales. In our largest  business,
full service accumulation,  we achieved 94 percent  employer-level  retention in
2006 and our retention of at-risk  participant assets continued to significantly
outpace the industry average," said Griswell. "Sales of our three key retirement
and investment products - full service accumulation, mutual funds and individual
annuities - each reached  record  levels,  combining  for $13.5  billion for the
year, an increase of 18 percent from 2005. We also achieved a fifth  consecutive
year of record  sales in our  Specialty  Benefits  division,  an  increase of 21
percent."

"Looking ahead, we remain highly optimistic about the  opportunities  that exist
across our  businesses,  and our ability to translate those  opportunities  into
growth,"  said  Griswell.  "We've built a strong  foundation  for success:  deep
experience  meeting the benefit needs of growing businesses and their employees;
a broad array of asset accumulation and retirement income management  solutions;
and unique expertise managing assets appropriate for retirement investors. We'll
continue  to strive to  leverage  these  competitive  strengths,  to execute our
customer-focused strategy, and to create long-term value for our shareholders."

                               SEGMENT HIGHLIGHTS

U.S. ASSET MANAGEMENT AND ACCUMULATION

Segment operating earnings for fourth quarter 2006 were a record $178.7 million,
compared  to  $136.0  million  for  the  same  period  in  2005.   Full  service
accumulation  generated  record  earnings  of $78.8  million,  compared to $64.8
million in fourth  quarter 2005,  reflecting  increased fees from higher account
values.  Full  service  accumulation  account  values  were $91.8  billion as of
December 31, 2006, compared to $77.3 billion as of December 31, 2005.  Principal
Global  Investors  generated  record  earnings of $32.1 million for the quarter,
compared to $18.7 million in fourth  quarter  2005,  primarily due to management
fee growth in all lines.

Operating revenues for the fourth quarter increased to a record $1,212.2 million
compared to $1,205.7  million for the same period in 2005.  Lower single premium
group annuity sales were more than offset by double-digit  revenue growth in all
other businesses  within the segment.  The single premium group annuity product,
typically  used to fund defined  benefit plan  terminations,  can generate large
premiums  from a small  number of  customers  and  tends to vary from  period to
period.   Excluding  this  product,   segment  revenues  increased  15  percent,
reflecting record revenues for full service accumulation,  individual annuities,
investment only, and Principal Global Investors.

                                       4
<PAGE>

Segment assets under  management  reached a record $221.9 billion as of December
31, 2006, up 35 percent from $164.3  billion as of December 31, 2005.  Excluding
the purchase of WM Advisors,  Inc., segment assets under management increased 18
percent from December 31, 2005.

INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION

Segment  operating  earnings for fourth  quarter 2006 were $14.9  million.  This
compares to $22.7 million of earnings for fourth quarter 2005, which included an
$8.7 million tax benefit associated with the liquidation of defined contribution
operations in Japan. Fourth quarter 2006 earnings included a net benefit of $0.8
million,  as tax  benefits of $5.9  million  were  substantially  offset by $5.1
million  of  other  items,  primarily  deflation  in  Chile  and  organizational
restructuring costs.

Operating  revenues were $128.6  million for fourth  quarter  2006,  compared to
$165.1 million for the same period last year. The decline in operating revenues,
primarily  the  result of  deflation  in Chile,  was  substantially  offset by a
corresponding decline in benefits and claims expenses.

Assets  under  management  for the  segment  were a record  $19.1  billion as of
December 31, 2006, compared to $15.4 billion as of December 31, 2005.

LIFE AND HEALTH INSURANCE

Segment operating earnings for fourth quarter 2006 were $64.9 million,  compared
to $63.2 million for the same period in 2005.  Individual Life division earnings
were $30.4  million,  compared to $25.0  million for fourth  quarter  2005.  The
increase from a year ago primarily  reflects  normal  fluctuations in experience
between periods.  Specialty  Benefits  division  earnings were $21.4 million,  a
decline of $0.4  million.  In fourth  quarter  2006,  growth in premium  for the
division,  and a  $2.9  million  benefit  to  earnings  from a  group  long-term
disability  reserve  refinement,  were  offset by  higher  loss  ratios.  Health
division  earnings  were $13.1  million,  compared  to $16.4  million for fourth
quarter 2005. The decline  primarily  reflects  worsened loss ratios compared to
the year ago period.

Operating revenues were $1,210.1 million, a ninth consecutive record quarter for
the  segment,  and an  increase of eight  percent  from the same period in 2005.
Specialty  Benefits  revenues  increased 15 percent,  driven by strong sales and
steady retention in all of the division's lines. Health revenues increased eight
percent,  reflecting  member growth in the division's  target markets and higher
premium  per  member.  Individual  Life  revenues  increased  slightly,  due  to
increasing fees from universal life and variable universal life products.


                                       5
<PAGE>

CORPORATE AND OTHER

Operating  losses  for  fourth  quarter  2006 were  $6.5  million,  compared  to
operating  losses of $4.0  million for the same period in 2005.  Fourth  quarter
2005 results reflect higher operating earnings from joint venture real estate.

FORWARD LOOKING AND CAUTIONARY STATEMENTS
This press  release  contains  forward-looking  statements,  including,  without
limitation,  statements  as to sales  targets,  sales and earnings  trends,  and
management's  beliefs,  expectations,  goals and opinions.  The company does not
undertake to update these statements, which are based on a number of assumptions
concerning future conditions that may ultimately prove to be inaccurate.  Future
events and their effects on the company may not be those anticipated, and actual
results  may  differ   materially   from  the  results   anticipated   in  these
forward-looking  statements.  The risks,  uncertainties  and factors  that could
cause or contribute to such material  differences are discussed in the company's
annual  report on Form 10-K for the year ended  December  31,  2005,  and in the
company's  quarterly  report on Form 10-Q for the quarter  ended  September  30,
2006,  filed by the company with the Securities and Exchange  Commission.  These
risks  and  uncertainties  include,  without  limitation:  competitive  factors;
volatility  of financial  markets;  decrease in ratings;  interest rate changes;
inability to attract and retain sales  representatives;  international  business
risks; foreign currency exchange rate fluctuations; a pandemic, terrorist attack
or  other  catastrophic  event;  default  of  the  company's  re-insurers;   and
investment portfolio risks.

USE OF NON-GAAP FINANCIAL MEASURES
The  company  uses a number  of  non-GAAP  financial  measures  that  management
believes are useful to investors  because they  illustrate  the  performance  of
normal,  ongoing operations,  which is important in understanding and evaluating
the  company's  financial  condition  and results of  operations.  They are not,
however, a substitute for U.S. GAAP financial measures.  Therefore,  the company
has  provided  reconciliations  of the  non-GAAP  measures to the most  directly
comparable  U.S. GAAP 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 the future  reporting  periods.  Management  also uses  non-GAAP
measures for goal setting, determining employee and senior management awards and
compensation,  and evaluating  performance on a basis comparable to that used by
investors and securities analysts.

SHARE REPURCHASES
In May 2006, following the Board's share repurchase  authorization of up to $500
million,  the  company  entered  into an  accelerated  common  stock  repurchase
agreement with an investment bank.  Under this agreement,  the company paid $500
million and received an initial  delivery of 7.67 million common  shares,  while
retaining the right to receive  additional common shares depending on the volume
weighted  average share price of the  company's  common stock over the program's
execution  period.  The program was completed during the fourth quarter 2006, at
which time the company  received  1.67  million  additional  common  shares.  On
November 28, 2006, the Board  authorized the repurchase of up to $250 million of
our  outstanding  common  stock.  The  company  began  activity  under  the  new
authorization  with the repurchase of approximately  $33 million of common stock
during the month ending January 31, 2007.

EARNINGS CONFERENCE CALL

At 9:00 A.M.  (CST)  tomorrow,  Chairman and CEO J. Barry Griswell and Executive
Vice  President and CFO Mike Gersie will lead a discussion  of results,  and the
company's  longer-term  growth  expectations,  during  a live  conference  call.
Parties  interested  in  listening  to the  conference  call live may access the
webcast    on    the    company's     Investor     Relations     (IR)    website
(www.principal.com/investor)  or by dialing  (800)  374-1609  (U.S.  callers) or
(706) 643-7701  (international  callers)  approximately  10 minutes prior to the
start of the call.  To access the call,  leader name is Tom Graf.  Listeners can
access  an audio  replay  of the call on the IR  website,  or by  calling  (800)
642-1687 (U.S. callers) or (706) 645-9291  (international  callers).  The access


                                       6
<PAGE>

code for the replay is 4587874.  Replays will be available  through February 13,
2007. The financial  supplement is currently  available on the company's website
and may be referred to during the conference call.

ABOUT THE PRINCIPAL FINANCIAL GROUP
The Principal  Financial Group(R) (The Principal (R))(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 $256.9
billion in assets under  management(5)  and serves some 17.6  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,           TWELVE MONTHS ENDED,
                                                     --------------- -------------- -------------- ---------------
<S>                                                        <C>              <C>          <C>              <C>
                                            SEGMENT      12/31/06         12/31/05       12/31/06        12/31/05
---------------------------------------------------- --------------- -------------- -------------- ---------------
              U.S. ASSET MANAGEMENT AND ACCUMULATION       $178.7           $136.0       $  645.1         $538.4
---------------------------------------------------- --------------- -------------- -------------- ---------------
    INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION          14.9             22.7           71.8           71.0
---------------------------------------------------- --------------- -------------- -------------- ---------------
                          LIFE AND HEALTH INSURANCE          64.9             63.2          282.5          274.4
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                CORPORATE AND OTHER          (6.5)            (4.0)         (27.3)         (21.4)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                 OPERATING EARNINGS         252.0            217.9          972.1          862.4
---------------------------------------------------- --------------- -------------- -------------- ---------------
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS (LOSSES), AS ADJUSTED           9.7            (15.9)          18.0          (20.6)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                        OTHER AFTER-TAX ADJUSTMENTS          22.4             44.9           41.2           59.5
---------------------------------------------------- --------------- -------------- -------------- ---------------
        NET INCOME AVAILABLE TO COMMON STOCKHOLDERS        $284.1           $246.9       $1,031.3         $901.3
---------------------------------------------------- --------------- -------------- -------------- ---------------

                                                                           PER DILUTED SHARE


                                                     ------------------------------ ------------------------------
                                                          THREE MONTHS ENDED,           TWELVE MONTHS ENDED,
                                                     --------------- -------------- -------------- ---------------
                                                        12/31/06       12/31/05       12/31/06        12/31/05
                                                     --------------- -------------- -------------- ---------------
                                 OPERATING EARNINGS      $ 0.93           $  0.77          $  3.53          $  2.97
---------------------------------------------------- --------------- -------------- -------------- ---------------
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS (LOSSES), AS ADJUSTED        0.04             (0.06)            0.07            (0.06)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                        OTHER AFTER-TAX ADJUSTMENTS        0.07              0.16             0.14             0.20
---------------------------------------------------- --------------- -------------- -------------- ---------------
        NET INCOME AVAILABLE TO COMMON STOCKHOLDERS      $ 1.04           $  0.87          $  3.74          $  3.11
---------------------------------------------------- --------------- -------------- -------------- ---------------
 WEIGHTED-AVERAGE DILUTED COMMON SHARES OUTSTANDING      272.1             282.9            275.5            289.9
---------------------------------------------------- --------------- -------------- -------------- ---------------
</TABLE>






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


                                       8
<PAGE>

<TABLE>
<CAPTION>


                         PRINCIPAL FINANCIAL GROUP, INC.
                              RESULTS OF OPERATIONS
                                  (IN MILLIONS)
-----------------------------------------------------------------------------------------------------------------
                                                       THREE MONTHS ENDED,             TWELVE MONTHS ENDED,
                                                 -------------------------------- -------------------------------
                                                    12/31/06         12/31/05        12/31/06        12/31/05
                                                 ---------------- --------------- --------------- ---------------
   <S>                                                <C>              <C>            <C>              <C>
   Premiums and other considerations                  $1,098.9         $1,148.6       $4,305.3         $3,975.0
   Fees and other revenues                               515.0            447.7        1,902.5          1,717.8
   Net investment income                                 923.4            877.4        3,618.0          3,360.1
   Net realized/unrealized capital gains                  21.6            (18.1)          44.7            (11.2)
   (losses)                                      ---------------- --------------- --------------- ---------------
   TOTAL REVENUES                                      2,558.9          2,455.6        9,870.5          9,041.7
                                                 ---------------- --------------- --------------- ---------------
   Benefits, claims, and settlement expenses           1,464.8          1,502.8        5,692.4          5,282.9
   Dividends to policyholders                             73.3             74.0          290.7            293.0
   Operating expenses                                    692.9            603.3        2,558.7          2,342.1
                                                 ---------------- --------------- --------------- ---------------
   TOTAL EXPENSES                                      2,231.0          2,180.1        8,541.8          7,918.0
                                                 ---------------- --------------- --------------- ---------------
   Income from continuing operations before
        income taxes                                     327.9            275.5        1,328.7          1,123.7
   Income taxes                                           65.6             31.3          295.0            232.2
                                                ---------------- --------------- --------------- ---------------
   Income from continuing operations, net of
        related income taxes                             262.3            244.2        1,033.7            891.5
   Income from discontinued operations, net of
        related taxes                                     30.1             11.0           30.6             27.5
                                                 ---------------- --------------- --------------- ---------------
   NET INCOME                                            292.4            255.2        1,064.3            919.0
   Preferred stock dividends                               8.3              8.3           33.0             17.7
                                                 ---------------- --------------- --------------- ---------------
   NET INCOME AVAILABLE TO COMMON STOCKHOLDERS        $  284.1         $  246.9       $1,031.3         $  901.3

   Less:
   Net realized/unrealized capital gains
        (losses), as adjusted                              9.7            (15.9)          18.0            (20.6)
   Other after-tax adjustments                            22.4             44.9           41.2             59.5
                                                 ---------------- --------------- --------------- ---------------
   OPERATING EARNINGS                                 $  252.0         $  217.9       $  972.1         $  862.4
                                                 ================ =============== =============== ===============

                        SELECTED BALANCE SHEET STATISTICS

                                                     ------------------------------------------------------------
                                                                            PERIOD ENDED
                                                     ------------------------------------------------------------
                                                          12/31/06              12/31/05            12/31/04
                                                     -------------------- --------------------- -----------------
  Total assets (in billions)                                   $   143.7             $   127.0         $   113.8
  Total common equity (in millions)                            $ 7,318.8             $ 7,265.2         $ 7,544.3
  Total common equity excluding accumulated other
       comprehensive income (in millions)                      $ 6,471.9             $ 6,270.4         $ 6,231.0
  End of period common shares outstanding
       (in                           millions)                     268.4                 280.6             300.6
  Book value per common share                                  $    27.27            $    25.89        $    25.10
  Book value per common share excluding
      accumulated other comprehensive income                   $    24.11            $    22.35        $    20.73

</TABLE>


                                       9
<PAGE>

<TABLE>
<CAPTION>

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

                                                          ------------------------------ --------------------------------
                                                               THREE MONTHS ENDED,            TWELVE MONTHS ENDED,
                                                          ------------------------------ --------------------------------
                                                             12/31/06       12/31/05        12/31/06        12/31/05
                                                          --------------- -------------- --------------- ----------------
<S>                                                                <C>             <C>             <C>             <C>
DILUTED EARNINGS PER COMMON SHARE:
Operating Earnings                                                 0.93            0.77            3.53            2.97
Net realized/unrealized capital gains (losses)                     0.04           (0.06)           0.07           (0.06)
Other after-tax adjustments                                        0.07            0.16            0.14            0.20
                                                          --------------- -------------- --------------- ----------------
Net income available to common stockholders                        1.04            0.87            3.74            3.11
                                                          =============== ============== =============== ================

BOOK VALUE PER COMMON SHARE EXCLUDING ACCUMULATED OTHER
COMPREHENSIVE INCOME:
Book value per common share excluding accumulated other
     comprehensive income                                         24.11           22.35           24.11           22.35
Net unrealized capital gains                                       3.21            3.66            3.21            3.66
Foreign currency translation                                      (0.10)          (0.08)          (0.10)          (0.08)
Net unrecognized post-retirement benefit obligation                0.05            -               0.05            -
Minimum pension liability                                          -              (0.04)           -              (0.04)
                                                          --------------- -------------- --------------- ----------------
Book value per common share including accumulated other
     comprehensive income                                         27.27           25.89           27.27           25.89
                                                          =============== ============== =============== ================
OPERATING REVENUES:
USAMA                                                          1,212.2         1,205.7         4,511.6         4,133.8
IAMA                                                             128.6           165.1           605.4           604.5
Life and Health                                                1,210.1         1,123.3         4,736.2         4,387.5
Corporate and Other                                              (13.9)          (13.0)          (27.4)          (59.1)
                                                          --------------- -------------- --------------- ----------------
Total operating revenues                                       2,537.0         2,481.1         9,825.8         9,066.7
Add:  Net realized/unrealized capital gains (losses)
     and related fee adjustments                                  20.6           (25.6)           44.2           (22.2)
Less:  Operating revenues from discontinued real estate           (1.3)           (0.1)           (0.5)            2.8
                                                          --------------- -------------- --------------- ----------------
Total GAAP revenues                                            2,558.9         2,455.6         9,870.5         9,041.7
                                                          =============== ============== =============== ================
OPERATING EARNINGS:
USAMA                                                            178.7           136.0           645.1           538.4
IAMA                                                              14.9            22.7            71.8            71.0
Life and Health                                                   64.9            63.2           282.5           274.4
Corporate and Other                                               (6.5)           (4.0)          (27.3)          (21.4)
                                                          --------------- -------------- --------------- ----------------
Total operating earnings                                         252.0           217.9           972.1           862.4
Net realized/unrealized capital gains (losses)                     9.7           (15.9)           18.0           (20.6)
Other after-tax adjustments                                       22.4            44.9            41.2            59.5
                                                          --------------- -------------- --------------- ----------------
Net income available to common stockholders                      284.1           246.9         1,031.3           901.3
                                                          =============== ============== =============== ================
NET REALIZED/UNREALIZED CAPITAL GAINS (LOSSES):
Net realized/unrealized capital gains (losses), as
adjusted                                                           9.7           (15.9)           18.0           (20.6)
Add:
Amortization of DPAC and sale inducement costs                    (1.5)            0.4            (5.4)            0.7
Capital gains distributed                                          6.0             2.0            11.8             5.8
Tax impacts                                                        3.5           (12.4)           12.1           (10.6)
Minority interest capital gains                                    2.9             0.3             7.7             2.5
Less related fee adjustments:
Unearned front-end fee income                                     (0.8)            0.3             0.8             1.1
Certain market value adjustments to fee revenues                  (0.2)           (7.8)           (1.3)          (12.1)
                                                          --------------- -------------- --------------- ----------------
GAAP net realized/unrealized capital gains (losses)               21.6           (18.1)           44.7           (11.2)
                                                          =============== ============== =============== ================
OTHER AFTER TAX ADJUSTMENTS:
IRS Audit Issue                                                    -              33.8            18.8            33.8
Contribution to foundation                                        (8.5)            -              (8.5)            -
Gain on disposal of discontinued real estate investments          30.9             -              30.9            22.3
Discontinued operations - Mortgage Banking                         -               2.7             -              (5.0)
Discontinued operations - BT                                       -               8.4             -               8.4
                                                          --------------- -------------- --------------- ----------------
Total other after-tax adjustments                                 22.4            44.9            41.2            59.5
                                                          =============== ============== =============== ================

</TABLE>

                                       10
<PAGE>


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

(1)  Use of non-GAAP  financial  measures is  discussed  in this  release  after
     Segment Highlights.
(2)  Operating return on average equity, excluding other comprehensive income
(3)  Includes $27.9 billion of AUM related to the company's  fourth quarter 2006
     acquisition of WM Advisors, Inc., which closed effective December 31, 2006.
(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, 2006


                                       11
<PAGE>
[{"type": "8-K", "sequence": "1", "filename": "finalfourthqtr06er.txt", "description": "FORM 8-K", "secsgml_size_bytes": 38194}]
{"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": "07582656"}, "business-address": {"street1": "711 HIGH STREET", "city": "DES MOINES", "state": "IA", "zip": "50392", "phone": "5152475111"}, "mail-address": {"street1": "711 HIGH STREET", "city": "DES MOINES", "state": "IA", "zip": "50392"}}
SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                    FORM 8-K

                                 CURRENT REPORT

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

                        Date of Report: FEBRUARY 5, 2007
                        (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 CFR240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
    Act (17 CFR240.13e-4(c))

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

                                       1
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On  February  5,  2007,  Principal  Financial  Group,  Inc.  publicly  announced
information  regarding its results of operations and financial condition for the
quarter  ended  December  31,  2006.  The text of the  announcement  is included
herewith as Exhibit 99.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

99 Fourth Quarter 2006 Earnings Release

                                    SIGNATURE

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

                                    PRINCIPAL FINANCIAL GROUP, INC.

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

Date:    February 6, 2007

                                       2
EXHIBIT 99
RELEASE: On receipt
MEDIA CONTACT:               Jeff Rader, 515-247-7883, RADER.JEFF@PRINCIPAL.COM
INVESTOR RELATIONS CONTACT:  Tom Graf, 515-235-9500,
                             investor-relations@principal.com

       PRINCIPAL FINANCIAL GROUP, INC. REPORTS FOURTH QUARTER 2006 RESULTS

Des Moines, IA (February 5, 2007) - Principal  Financial Group, Inc. (NYSE: PFG)
today announced net income available to common stockholders for the three months
ended December 31, 2006, of $284.1 million,  or $1.04 per diluted share compared
to $246.9  million,  or $0.87 per  diluted  share  for the  three  months  ended
December 31, 2005. The company reported operating earnings of $252.0 million for
fourth  quarter  2006,  compared  to $217.9  million  for fourth  quarter  2005.
Operating  earnings per diluted  share (EPS) for fourth  quarter 2006 were $0.93
compared to $0.77 for the same  period in 2005.  Operating  revenues  for fourth
quarter 2006 were a record $2,537.0 million compared to $2,481.1 million for the
same period last year.(1)

"The fourth quarter was a very strong finish for The Principal,  with 16 percent
growth in operating  earnings  contributing to a 13 percent increase in earnings
for the year," said J. Barry  Griswell,  chairman and chief  executive  officer.
"Driven by record  earnings for U.S. Asset  Management and  Accumulation,  which
improved  $107 million or 20 percent for the year,  and by  disciplined  capital
management,  the  company  delivered  19 percent  growth in  earnings  per share
compared to 2005."

"2006 marks an eighth consecutive year of record earnings for The Principal,  as
we continue to build an exceptional track record of performance," said Griswell.
"Since our IPO in 2001, we've achieved five-year  compounded annual growth of 11
percent for earnings and 17 percent for earnings per share.  We've also improved
return on equity  (ROE)(2) by 640 basis  points  since 2001,  to 15.3 percent at
year-end."

     Additional highlights for 2006 include:

     o    Record net income  available  to common  stockholders  (net income) of
          $1.03  billion,  and record net income per  diluted  share of $3.74 in
          2006.
     o    Record operating  earnings of $972.1 million,  and record EPS of $3.53
          in 2006.
     o    Record assets under management of $256.9 billion, up $61.7 billion, or
          32 percent from 2005(3).
     o    Record full service  accumulation  account values of $91.8 billion, up
          19 percent from 2005.
     o    Record  sales  of each  of the  company's  three  key  retirement  and
          investment products in 2006, including: $3.8 billion for mutual funds,
          up 12 percent; $2.5 billion for individual  annuities,  up 25 percent;
          and $7.2 billion for organic full service accumulation, up 18 percent,
          including $1.9 billion in the fourth quarter.

"Strong  results in 2006 reflect our ongoing focus on  fundamentals - innovative
retirement and employee benefits solutions,  responsive service, and exceptional
convenience, choice and value," said Griswell. "During the year, we continued to
help employers understand benefit trends and employee retention strategies,  and

                                       3
to broaden our array of high quality,  cost effective benefits.  We continued to
help captive and independent  distribution alike, through new product education,
additional  needs analysis tools,  and point of sale expertise.  And we expanded
our portfolio of worksite solutions, adding an array of product offerings, tools
and personalized  guidance to help employees assess needs, evaluate options, and
execute a tailored financial plan."

"Our ongoing  investment in helping  customers  achieve  financial  security and
success  continues to drive solid retention and sales. In our largest  business,
full service accumulation,  we achieved 94 percent  employer-level  retention in
2006 and our retention of at-risk  participant assets continued to significantly
outpace the industry average," said Griswell. "Sales of our three key retirement
and investment products - full service accumulation, mutual funds and individual
annuities - each reached  record  levels,  combining  for $13.5  billion for the
year, an increase of 18 percent from 2005. We also achieved a fifth  consecutive
year of record  sales in our  Specialty  Benefits  division,  an  increase of 21
percent."

"Looking ahead, we remain highly optimistic about the  opportunities  that exist
across our  businesses,  and our ability to translate those  opportunities  into
growth,"  said  Griswell.  "We've built a strong  foundation  for success:  deep
experience  meeting the benefit needs of growing businesses and their employees;
a broad array of asset accumulation and retirement income management  solutions;
and unique expertise managing assets appropriate for retirement investors. We'll
continue  to strive to  leverage  these  competitive  strengths,  to execute our
customer-focused strategy, and to create long-term value for our shareholders."

                               SEGMENT HIGHLIGHTS

U.S. ASSET MANAGEMENT AND ACCUMULATION

Segment operating earnings for fourth quarter 2006 were a record $178.7 million,
compared  to  $136.0  million  for  the  same  period  in  2005.   Full  service
accumulation  generated  record  earnings  of $78.8  million,  compared to $64.8
million in fourth  quarter 2005,  reflecting  increased fees from higher account
values.  Full  service  accumulation  account  values  were $91.8  billion as of
December 31, 2006, compared to $77.3 billion as of December 31, 2005.  Principal
Global  Investors  generated  record  earnings of $32.1 million for the quarter,
compared to $18.7 million in fourth  quarter  2005,  primarily due to management
fee growth in all lines.

Operating revenues for the fourth quarter increased to a record $1,212.2 million
compared to $1,205.7  million for the same period in 2005.  Lower single premium
group annuity sales were more than offset by double-digit  revenue growth in all
other businesses  within the segment.  The single premium group annuity product,
typically  used to fund defined  benefit plan  terminations,  can generate large
premiums  from a small  number of  customers  and  tends to vary from  period to
period.   Excluding  this  product,   segment  revenues  increased  15  percent,
reflecting record revenues for full service accumulation,  individual annuities,
investment only, and Principal Global Investors.

                                       4
Segment assets under  management  reached a record $221.9 billion as of December
31, 2006, up 35 percent from $164.3  billion as of December 31, 2005.  Excluding
the purchase of WM Advisors,  Inc., segment assets under management increased 18
percent from December 31, 2005.

INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION

Segment  operating  earnings for fourth  quarter 2006 were $14.9  million.  This
compares to $22.7 million of earnings for fourth quarter 2005, which included an
$8.7 million tax benefit associated with the liquidation of defined contribution
operations in Japan. Fourth quarter 2006 earnings included a net benefit of $0.8
million,  as tax  benefits of $5.9  million  were  substantially  offset by $5.1
million  of  other  items,  primarily  deflation  in  Chile  and  organizational
restructuring costs.

Operating  revenues were $128.6  million for fourth  quarter  2006,  compared to
$165.1 million for the same period last year. The decline in operating revenues,
primarily  the  result of  deflation  in Chile,  was  substantially  offset by a
corresponding decline in benefits and claims expenses.

Assets  under  management  for the  segment  were a record  $19.1  billion as of
December 31, 2006, compared to $15.4 billion as of December 31, 2005.

LIFE AND HEALTH INSURANCE

Segment operating earnings for fourth quarter 2006 were $64.9 million,  compared
to $63.2 million for the same period in 2005.  Individual Life division earnings
were $30.4  million,  compared to $25.0  million for fourth  quarter  2005.  The
increase from a year ago primarily  reflects  normal  fluctuations in experience
between periods.  Specialty  Benefits  division  earnings were $21.4 million,  a
decline of $0.4  million.  In fourth  quarter  2006,  growth in premium  for the
division,  and a  $2.9  million  benefit  to  earnings  from a  group  long-term
disability  reserve  refinement,  were  offset by  higher  loss  ratios.  Health
division  earnings  were $13.1  million,  compared  to $16.4  million for fourth
quarter 2005. The decline  primarily  reflects  worsened loss ratios compared to
the year ago period.

Operating revenues were $1,210.1 million, a ninth consecutive record quarter for
the  segment,  and an  increase of eight  percent  from the same period in 2005.
Specialty  Benefits  revenues  increased 15 percent,  driven by strong sales and
steady retention in all of the division's lines. Health revenues increased eight
percent,  reflecting  member growth in the division's  target markets and higher
premium  per  member.  Individual  Life  revenues  increased  slightly,  due  to
increasing fees from universal life and variable universal life products.

                                       5
CORPORATE AND OTHER

Operating  losses  for  fourth  quarter  2006 were  $6.5  million,  compared  to
operating  losses of $4.0  million for the same period in 2005.  Fourth  quarter
2005 results reflect higher operating earnings from joint venture real estate.

FORWARD LOOKING AND CAUTIONARY STATEMENTS
This press  release  contains  forward-looking  statements,  including,  without
limitation,  statements  as to sales  targets,  sales and earnings  trends,  and
management's  beliefs,  expectations,  goals and opinions.  The company does not
undertake to update these statements, which are based on a number of assumptions
concerning future conditions that may ultimately prove to be inaccurate.  Future
events and their effects on the company may not be those anticipated, and actual
results  may  differ   materially   from  the  results   anticipated   in  these
forward-looking  statements.  The risks,  uncertainties  and factors  that could
cause or contribute to such material  differences are discussed in the company's
annual  report on Form 10-K for the year ended  December  31,  2005,  and in the
company's  quarterly  report on Form 10-Q for the quarter  ended  September  30,
2006,  filed by the company with the Securities and Exchange  Commission.  These
risks  and  uncertainties  include,  without  limitation:  competitive  factors;
volatility  of financial  markets;  decrease in ratings;  interest rate changes;
inability to attract and retain sales  representatives;  international  business
risks; foreign currency exchange rate fluctuations; a pandemic, terrorist attack
or  other  catastrophic  event;  default  of  the  company's  re-insurers;   and
investment portfolio risks.

USE OF NON-GAAP FINANCIAL MEASURES
The  company  uses a number  of  non-GAAP  financial  measures  that  management
believes are useful to investors  because they  illustrate  the  performance  of
normal,  ongoing operations,  which is important in understanding and evaluating
the  company's  financial  condition  and results of  operations.  They are not,
however, a substitute for U.S. GAAP financial measures.  Therefore,  the company
has  provided  reconciliations  of the  non-GAAP  measures to the most  directly
comparable  U.S. GAAP 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 the future  reporting  periods.  Management  also uses  non-GAAP
measures for goal setting, determining employee and senior management awards and
compensation,  and evaluating  performance on a basis comparable to that used by
investors and securities analysts.

SHARE REPURCHASES
In May 2006, following the Board's share repurchase  authorization of up to $500
million,  the  company  entered  into an  accelerated  common  stock  repurchase
agreement with an investment bank.  Under this agreement,  the company paid $500
million and received an initial  delivery of 7.67 million common  shares,  while
retaining the right to receive  additional common shares depending on the volume
weighted  average share price of the  company's  common stock over the program's
execution  period.  The program was completed during the fourth quarter 2006, at
which time the company  received  1.67  million  additional  common  shares.  On
November 28, 2006, the Board  authorized the repurchase of up to $250 million of
our  outstanding  common  stock.  The  company  began  activity  under  the  new
authorization  with the repurchase of approximately  $33 million of common stock
during the month ending January 31, 2007.

EARNINGS CONFERENCE CALL

At 9:00 A.M.  (CST)  tomorrow,  Chairman and CEO J. Barry Griswell and Executive
Vice  President and CFO Mike Gersie will lead a discussion  of results,  and the
company's  longer-term  growth  expectations,  during  a live  conference  call.
Parties  interested  in  listening  to the  conference  call live may access the
webcast    on    the    company's     Investor     Relations     (IR)    website
(www.principal.com/investor)  or by dialing  (800)  374-1609  (U.S.  callers) or
(706) 643-7701  (international  callers)  approximately  10 minutes prior to the
start of the call.  To access the call,  leader name is Tom Graf.  Listeners can
access  an audio  replay  of the call on the IR  website,  or by  calling  (800)
642-1687 (U.S. callers) or (706) 645-9291  (international  callers).  The access

                                       6
code for the replay is 4587874.  Replays will be available  through February 13,
2007. The financial  supplement is currently  available on the company's website
and may be referred to during the conference call.

ABOUT THE PRINCIPAL FINANCIAL GROUP
The Principal  Financial Group(R) (The Principal (R))(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 $256.9
billion in assets under  management(5)  and serves some 17.6  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,           TWELVE MONTHS ENDED,
                                                     --------------- -------------- -------------- ---------------
SEGMENT      12/31/06         12/31/05       12/31/06        12/31/05
---------------------------------------------------- --------------- -------------- -------------- ---------------
              U.S. ASSET MANAGEMENT AND ACCUMULATION       $178.7           $136.0       $  645.1         $538.4
---------------------------------------------------- --------------- -------------- -------------- ---------------
    INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION          14.9             22.7           71.8           71.0
---------------------------------------------------- --------------- -------------- -------------- ---------------
                          LIFE AND HEALTH INSURANCE          64.9             63.2          282.5          274.4
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                CORPORATE AND OTHER          (6.5)            (4.0)         (27.3)         (21.4)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                 OPERATING EARNINGS         252.0            217.9          972.1          862.4
---------------------------------------------------- --------------- -------------- -------------- ---------------
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS (LOSSES), AS ADJUSTED           9.7            (15.9)          18.0          (20.6)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                        OTHER AFTER-TAX ADJUSTMENTS          22.4             44.9           41.2           59.5
---------------------------------------------------- --------------- -------------- -------------- ---------------
        NET INCOME AVAILABLE TO COMMON STOCKHOLDERS        $284.1           $246.9       $1,031.3         $901.3
---------------------------------------------------- --------------- -------------- -------------- ---------------

                                                                           PER DILUTED SHARE

                                                     ------------------------------ ------------------------------
                                                          THREE MONTHS ENDED,           TWELVE MONTHS ENDED,
                                                     --------------- -------------- -------------- ---------------
                                                        12/31/06       12/31/05       12/31/06        12/31/05
                                                     --------------- -------------- -------------- ---------------
                                 OPERATING EARNINGS      $ 0.93           $  0.77          $  3.53          $  2.97
---------------------------------------------------- --------------- -------------- -------------- ---------------
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS (LOSSES), AS ADJUSTED        0.04             (0.06)            0.07            (0.06)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                        OTHER AFTER-TAX ADJUSTMENTS        0.07              0.16             0.14             0.20
---------------------------------------------------- --------------- -------------- -------------- ---------------
        NET INCOME AVAILABLE TO COMMON STOCKHOLDERS      $ 1.04           $  0.87          $  3.74          $  3.11
---------------------------------------------------- --------------- -------------- -------------- ---------------
 WEIGHTED-AVERAGE DILUTED COMMON SHARES OUTSTANDING      272.1             282.9            275.5            289.9
---------------------------------------------------- --------------- -------------- -------------- ---------------
*OPERATING  EARNINGS  VERSUS  U.S.  GAAP (GAAP) NET INCOME  AVAILABLE  TO COMMON
STOCKHOLDERS
Management   uses  operating   earnings,   which  excludes  the  effect  of  net
realized/unrealized  capital gains and losses, as adjusted,  and other after-tax
adjustments, for goal setting, determining employee compensation, and evaluating
performance  on a basis  comparable  to that used by  investors  and  securities
analysts.  Segment operating  earnings are determined by adjusting U.S. GAAP net
income  available to common  stockholders  for net  realized/unrealized  capital
gains and losses,  as  adjusted,  and other  after-tax  adjustments  the company
believes are not indicative of overall  operating  trends.  Note: it is possible
these  adjusting  items  have  occurred  in the past and  could  recur in future
reporting  periods.   While  these  items  may  be  significant   components  in
understanding and assessing our consolidated financial  performance,  management
believes  the   presentation  of  segment   operating   earnings   enhances  the
understanding of our results of operations by highlighting earnings attributable
to the normal, ongoing operations of the company's businesses.

                                       8
PRINCIPAL FINANCIAL GROUP, INC.
                              RESULTS OF OPERATIONS
                                  (IN MILLIONS)
-----------------------------------------------------------------------------------------------------------------
                                                       THREE MONTHS ENDED,             TWELVE MONTHS ENDED,
                                                 -------------------------------- -------------------------------
                                                    12/31/06         12/31/05        12/31/06        12/31/05
                                                 ---------------- --------------- --------------- ---------------
Premiums and other considerations                  $1,098.9         $1,148.6       $4,305.3         $3,975.0
   Fees and other revenues                               515.0            447.7        1,902.5          1,717.8
   Net investment income                                 923.4            877.4        3,618.0          3,360.1
   Net realized/unrealized capital gains                  21.6            (18.1)          44.7            (11.2)
   (losses)                                      ---------------- --------------- --------------- ---------------
   TOTAL REVENUES                                      2,558.9          2,455.6        9,870.5          9,041.7
                                                 ---------------- --------------- --------------- ---------------
   Benefits, claims, and settlement expenses           1,464.8          1,502.8        5,692.4          5,282.9
   Dividends to policyholders                             73.3             74.0          290.7            293.0
   Operating expenses                                    692.9            603.3        2,558.7          2,342.1
                                                 ---------------- --------------- --------------- ---------------
   TOTAL EXPENSES                                      2,231.0          2,180.1        8,541.8          7,918.0
                                                 ---------------- --------------- --------------- ---------------
   Income from continuing operations before
        income taxes                                     327.9            275.5        1,328.7          1,123.7
   Income taxes                                           65.6             31.3          295.0            232.2
                                                ---------------- --------------- --------------- ---------------
   Income from continuing operations, net of
        related income taxes                             262.3            244.2        1,033.7            891.5
   Income from discontinued operations, net of
        related taxes                                     30.1             11.0           30.6             27.5
                                                 ---------------- --------------- --------------- ---------------
   NET INCOME                                            292.4            255.2        1,064.3            919.0
   Preferred stock dividends                               8.3              8.3           33.0             17.7
                                                 ---------------- --------------- --------------- ---------------
   NET INCOME AVAILABLE TO COMMON STOCKHOLDERS        $  284.1         $  246.9       $1,031.3         $  901.3

   Less:
   Net realized/unrealized capital gains
        (losses), as adjusted                              9.7            (15.9)          18.0            (20.6)
   Other after-tax adjustments                            22.4             44.9           41.2             59.5
                                                 ---------------- --------------- --------------- ---------------
   OPERATING EARNINGS                                 $  252.0         $  217.9       $  972.1         $  862.4
                                                 ================ =============== =============== ===============

                        SELECTED BALANCE SHEET STATISTICS

                                                     ------------------------------------------------------------
                                                                            PERIOD ENDED
                                                     ------------------------------------------------------------
                                                          12/31/06              12/31/05            12/31/04
                                                     -------------------- --------------------- -----------------
  Total assets (in billions)                                   $   143.7             $   127.0         $   113.8
  Total common equity (in millions)                            $ 7,318.8             $ 7,265.2         $ 7,544.3
  Total common equity excluding accumulated other
       comprehensive income (in millions)                      $ 6,471.9             $ 6,270.4         $ 6,231.0
  End of period common shares outstanding
       (in                           millions)                     268.4                 280.6             300.6
  Book value per common share                                  $    27.27            $    25.89        $    25.10
  Book value per common share excluding
      accumulated other comprehensive income                   $    24.11            $    22.35        $    20.73
9
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,
                                                          ------------------------------ --------------------------------
                                                             12/31/06       12/31/05        12/31/06        12/31/05
                                                          --------------- -------------- --------------- ----------------
DILUTED EARNINGS PER COMMON SHARE:
Operating Earnings                                                 0.93            0.77            3.53            2.97
Net realized/unrealized capital gains (losses)                     0.04           (0.06)           0.07           (0.06)
Other after-tax adjustments                                        0.07            0.16            0.14            0.20
                                                          --------------- -------------- --------------- ----------------
Net income available to common stockholders                        1.04            0.87            3.74            3.11
                                                          =============== ============== =============== ================

BOOK VALUE PER COMMON SHARE EXCLUDING ACCUMULATED OTHER
COMPREHENSIVE INCOME:
Book value per common share excluding accumulated other
     comprehensive income                                         24.11           22.35           24.11           22.35
Net unrealized capital gains                                       3.21            3.66            3.21            3.66
Foreign currency translation                                      (0.10)          (0.08)          (0.10)          (0.08)
Net unrecognized post-retirement benefit obligation                0.05            -               0.05            -
Minimum pension liability                                          -              (0.04)           -              (0.04)
                                                          --------------- -------------- --------------- ----------------
Book value per common share including accumulated other
     comprehensive income                                         27.27           25.89           27.27           25.89
                                                          =============== ============== =============== ================
OPERATING REVENUES:
USAMA                                                          1,212.2         1,205.7         4,511.6         4,133.8
IAMA                                                             128.6           165.1           605.4           604.5
Life and Health                                                1,210.1         1,123.3         4,736.2         4,387.5
Corporate and Other                                              (13.9)          (13.0)          (27.4)          (59.1)
                                                          --------------- -------------- --------------- ----------------
Total operating revenues                                       2,537.0         2,481.1         9,825.8         9,066.7
Add:  Net realized/unrealized capital gains (losses)
     and related fee adjustments                                  20.6           (25.6)           44.2           (22.2)
Less:  Operating revenues from discontinued real estate           (1.3)           (0.1)           (0.5)            2.8
                                                          --------------- -------------- --------------- ----------------
Total GAAP revenues                                            2,558.9         2,455.6         9,870.5         9,041.7
                                                          =============== ============== =============== ================
OPERATING EARNINGS:
USAMA                                                            178.7           136.0           645.1           538.4
IAMA                                                              14.9            22.7            71.8            71.0
Life and Health                                                   64.9            63.2           282.5           274.4
Corporate and Other                                               (6.5)           (4.0)          (27.3)          (21.4)
                                                          --------------- -------------- --------------- ----------------
Total operating earnings                                         252.0           217.9           972.1           862.4
Net realized/unrealized capital gains (losses)                     9.7           (15.9)           18.0           (20.6)
Other after-tax adjustments                                       22.4            44.9            41.2            59.5
                                                          --------------- -------------- --------------- ----------------
Net income available to common stockholders                      284.1           246.9         1,031.3           901.3
                                                          =============== ============== =============== ================
NET REALIZED/UNREALIZED CAPITAL GAINS (LOSSES):
Net realized/unrealized capital gains (losses), as
adjusted                                                           9.7           (15.9)           18.0           (20.6)
Add:
Amortization of DPAC and sale inducement costs                    (1.5)            0.4            (5.4)            0.7
Capital gains distributed                                          6.0             2.0            11.8             5.8
Tax impacts                                                        3.5           (12.4)           12.1           (10.6)
Minority interest capital gains                                    2.9             0.3             7.7             2.5
Less related fee adjustments:
Unearned front-end fee income                                     (0.8)            0.3             0.8             1.1
Certain market value adjustments to fee revenues                  (0.2)           (7.8)           (1.3)          (12.1)
                                                          --------------- -------------- --------------- ----------------
GAAP net realized/unrealized capital gains (losses)               21.6           (18.1)           44.7           (11.2)
                                                          =============== ============== =============== ================
OTHER AFTER TAX ADJUSTMENTS:
IRS Audit Issue                                                    -              33.8            18.8            33.8
Contribution to foundation                                        (8.5)            -              (8.5)            -
Gain on disposal of discontinued real estate investments          30.9             -              30.9            22.3
Discontinued operations - Mortgage Banking                         -               2.7             -              (5.0)
Discontinued operations - BT                                       -               8.4             -               8.4
                                                          --------------- -------------- --------------- ----------------
Total other after-tax adjustments                                 22.4            44.9            41.2            59.5
                                                          =============== ============== =============== ================
10
---------------------------

(1)  Use of non-GAAP  financial  measures is  discussed  in this  release  after
     Segment Highlights.
(2)  Operating return on average equity, excluding other comprehensive income
(3)  Includes $27.9 billion of AUM related to the company's  fourth quarter 2006
     acquisition of WM Advisors, Inc., which closed effective December 31, 2006.
(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, 2006

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