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     <TD noWrap align=center><B><FONT size=5 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">SECURITIES AND EXCHANGE COMMISSION</FONT></B>&nbsp;</TD></TR>
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     <TD align=center><B><FONT size=2 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">Washington, D.C. 20549</FONT></B></TD></TR>
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     <TD align=center><B><FONT size=5 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">FORM 8-K</FONT></B></TD></TR>
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     <TD align=center><B><FONT size=3 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">CURRENT REPORT</FONT></B></TD></TR>
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     <TD align=center><B><FONT size=3 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">Pursuant to Section 13 or 15(d) of the</FONT></B></TD></TR>
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     <TD align=center><B><FONT size=3 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">Securities Exchange Act of 1934</FONT></B></TD></TR>
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     <TD align=center><FONT size=3 face="Times New Roman,Arial,Helvetica,sans-serif">Date of Report: </FONT><B><FONT size=3 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">November 1, 2010</FONT></B></TD></TR>
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     <TD align=center><FONT size=3 face="Times New Roman,Arial,Helvetica,sans-serif">(Date of earliest event reported)</FONT></TD></TR>
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     <TD noWrap align=center><B><FONT size=5 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">PRINCIPAL FINANCIAL GROUP, INC.</FONT></B>&nbsp;</TD></TR>
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     <TD align=center><FONT size=3 face="Times New Roman,Arial,Helvetica,sans-serif">(Exact name of registrant as specified in its charter)</FONT></TD></TR></TABLE></DIV>
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     <TD style="TEXT-INDENT: 10px" noWrap align=left><B><FONT size=2 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Delaware</FONT></B>&nbsp;</TD>
     <TD style="TEXT-INDENT: 7px" noWrap align=left><B><FONT size=2 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1-16725</FONT></B>&nbsp;</TD>
     <TD noWrap align=left><B><FONT size=2 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 42-1520346</FONT></B>&nbsp;</TD></TR>
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     <TD noWrap align=center><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (State or other jurisdiction</FONT>&nbsp;</TD>
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     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (I.R.S. Employer</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=center><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; of incorporation)</FONT>&nbsp;</TD>
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     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp; Identification Number)</FONT>&nbsp;</TD></TR></TABLE></DIV>
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     <TD noWrap align=left><B><FONT size=2 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 711 High Street, Des Moines, Iowa 50392</FONT></B>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (Address of principal executive offices)</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><B><FONT size=2 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (515) 247-5111</FONT></B>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Registrant&#146;s telephone number, including area code)</FONT>&nbsp;</TD></TR>
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     <TD colSpan=2 noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the</FONT>&nbsp;</TD></TR>
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     <TD colSpan=2 noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">registrant under any of the following provisions:</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">[&nbsp;&nbsp;&nbsp;&nbsp; ]</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">240.14d-2(b))</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR</FONT>&nbsp;</TD></TR>
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<P><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">240.13e-4(c))</FONT>&nbsp;</P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; __________________</P>
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     <TD colSpan=2 noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Page 2</FONT><FONT size=2>&nbsp;</FONT></TD>
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     <TD colSpan=3 noWrap align=left><B><FONT size=3 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">Item 2.02. Results of Operations and Financial Condition</FONT></B>&nbsp;</TD></TR>
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     <TD colSpan=3 noWrap align=left><FONT size=3 face="Times New Roman,Arial,Helvetica,sans-serif">On November 1, 2010, Principal Financial Group, Inc. publicly announced information regarding its</FONT>&nbsp;</TD></TR>
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     <TD colSpan=3 noWrap align=left><FONT size=3 face="Times New Roman,Arial,Helvetica,sans-serif">results of operations and financial condition for the quarter ended September 30, 2010. The text of the</FONT>&nbsp;</TD></TR>
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     <TD colSpan=2 noWrap align=left><FONT size=3 face="Times New Roman,Arial,Helvetica,sans-serif">announcement is included herewith as Exhibit 99.</FONT>&nbsp;</TD>
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     <TD colSpan=2 noWrap align=left><B><FONT size=3 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">Item 9.01 Financial Statements and Exhibits</FONT></B>&nbsp;</TD>
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     <TD noWrap align=left><FONT size=3 face="Times New Roman,Arial,Helvetica,sans-serif">99</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=3 face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp; Third Quarter 2010 Earnings Release</FONT>&nbsp;</TD>
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     <TD colSpan=3 align=center><B><FONT size=3 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">SIGNATURE</FONT></B></TD></TR>
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     <TD style="TEXT-INDENT: 3px" colSpan=2 noWrap align=left><FONT size=3 face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp; Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly</FONT>&nbsp;</TD></TR>
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     <TD colSpan=3 noWrap align=left><FONT size=3 face="Times New Roman,Arial,Helvetica,sans-serif">caused this report to be signed on its behalf by the undersigned thereunto duly authorized.</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 54px" colSpan=2 noWrap align=left><FONT size=3 face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; PRINCIPAL FINANCIAL GROUP, INC.</FONT>&nbsp;</TD></TR>
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     <TD colSpan=2 noWrap align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=3 face="Times New Roman,Arial,Helvetica,sans-serif">By:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>&nbsp;<FONT size=3 face="Times New Roman,Arial,Helvetica,sans-serif"><U>/s/ Terrance J. Lillis</U></FONT><U>&nbsp;&nbsp;&nbsp;&nbsp;___________________&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </U></TD></TR>
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     <TD style="TEXT-INDENT: 54px" colSpan=2 noWrap align=left><FONT size=3 face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Name:&nbsp;&nbsp; Terrance J. Lillis</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 54px" colSpan=2 noWrap align=left><FONT size=3 face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Title:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Senior Vice President and Chief Financial Officer</FONT>&nbsp;</TD></TR>
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     <TD colSpan=2 noWrap align=left><FONT size=3 face="Times New Roman,Arial,Helvetica,sans-serif">Date: November 2, 2010</FONT>&nbsp;</TD>
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     <TD style="TEXT-INDENT: 88px" noWrap align=left><B><FONT size=2 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; EXHIBIT 99</FONT></B>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Release:</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">On receipt, November 1, 2010</FONT></TD></TR>
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     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Media contact:</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Susan Houser, 515-248-2268<FONT size=2 face="Times New Roman">,</FONT><FONT face="Times New Roman"> <U>mail to: houser.susan@principal.com</U></FONT></FONT></TD></TR>
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     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Investor contact:</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">John Egan, 515-235-9500, </FONT><FONT color=#0000ff size=2 face="Times New Roman,Arial,Helvetica,sans-serif"><U><FONT color=#000000>mail to: egan.john@principal.com</FONT></U></FONT></TD></TR>
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     <TD style="TEXT-INDENT: 9px" colSpan=2 noWrap align=left><B><FONT size=4 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Principal Financial Group, Inc. Announces Third Quarter 2010 Results</FONT></B>&nbsp;</TD></TR></TABLE></DIV>
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<LI><B><FONT size=2 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">Third quarter 2010 operating earnings</FONT></B><B><SUP><FONT size=2 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">1 </FONT></SUP></B><B><FONT size=2 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">of $218.9 million, net income available to common</FONT></B> <B><FONT size=2 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">stockholders of $142.2 million</FONT></B>
<LI><B><FONT size=2 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">Assets under management of $305.7 billion increased 9 percent compared to third quarter</FONT></B> <B><FONT size=2 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">2009</FONT></B>
<LI><B><FONT size=2 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">Book value per share, excluding AOCI</FONT></B><B><SUP><FONT size=2 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">2 </FONT></SUP></B><B><FONT size=2 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">increased to a record high of $27.71, up 5 percent</FONT></B> <B><FONT size=2 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">over third quarter 2009 and 1 percent sequentially</FONT></B>
<LI><B><FONT size=2 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">Operating revenues increased 1 percent to $1,986.7 million, compared to third quarter 2009</FONT></B> </LI></UL>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">(Des Moines, Iowa) &#150; Principal Financial Group, Inc. (NYSE: PFG) today announced results for third quarter</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">2010. The company reported operating earnings of $218.9 million for third quarter 2010, compared to $219.1</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">million for third quarter 2009. Operating earnings per diluted share (EPS) were $0.68 for the third quarter 2010 and</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">2009. The company reported net income available to common stockholders of $142.2 million, or $0.44 per diluted</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">share for the three months ended Sept. 30, 2010, compared to $184.7 million, or $0.57 per diluted share for the</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">three months ended Sept. 30, 2009. Operating revenues for third quarter 2010 were $1,986.7 million compared to</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">$1,961.0 million for the same period last year.</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 15px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &#147;The Principal</FONT><SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">&#174; </FONT></SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">continued to deliver strong financial results during the third quarter. Compared to 2009,</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">on a year-to-date basis, operating earnings are up 19 percent while average assets under management are up 12</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">percent. This reflects strong execution in an economic environment that is improving slowly. Importantly, we&#146;re</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">seeing increasing signs of growth across our businesses. Highlights for the quarter include strong net cash flow</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">in Principal Funds, Principal Global Investors and Principal International,&#148; said Larry D. Zimpleman, chairman,</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">president and chief executive officer of Principal Financial Group, Inc. &#147;Our hybrid business model of asset</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">management and risk-based products, combined with our leadership position in the U.S. and strong presence in</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">select international markets, uniquely positions The Principal to help a growing middle income customer base</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">achieve financial security and success.&#148;</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 15px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &#147;Despite the choppy economic recovery, our results in the third quarter demonstrate that our businesses</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">continue to grow and we are excited about our prospects going forward,&#148; said Terry Lillis, senior vice president and</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">chief financial officer. &#147;During the third quarter and now early into our second month of the fourth quarter, we are</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">seeing positive sales momentum and are confident we will finish 2010 with Full Service Accumulation sales 15-20</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">percent higher than 2009 year-end sales, resulting in positive cash flows. Overall, our diversified businesses and</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">geography mix, strong balance sheet and continued expense management have and will continue to serve us well.&#148;</FONT>&nbsp;</TD></TR>
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     <TD>&nbsp;________________________</TD></TR>
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     <TD noWrap align=left><SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">1 </FONT></SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Use of non-GAAP financial measures is discussed in this release after Segment Highlights</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">2 </FONT></SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Accumulated Other Comprehensive Income</FONT>&nbsp;</TD></TR></TABLE></DIV>
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     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Page 4</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><B><FONT size=2 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">Key Highlights</FONT></B>&nbsp;</TD></TR></TABLE></DIV>
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<LI><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Principal International had record assets under management as of Sept. 30, 2010 of $42.3 billion and $1.0</FONT> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">billion in net positive cash flow in the third quarter.</FONT>
<LI><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Solid sales of the company&#146;s three key U.S. retirement and investment products in the third quarter, with</FONT> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">$864 million for Full Service Accumulation, $2.5 billion for Principal Funds and $364 million for Individual</FONT> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Annuities.</FONT>
<LI><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Record net cash flow in Principal Funds of $790 million in the third quarter.</FONT>
<LI><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Principal Global Investors had unaffiliated net cash flow of $800 million in third quarter.</FONT>
<LI><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Continued strong operating leverage, reflected in a 19 percent growth in operating earnings through nine</FONT> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">months compared to 12 percent growth in average assets under management.</FONT>
<LI><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Strong capital and liquidity, with an estimated risk based capital ratio of 450 percent at quarter-end and $2.2</FONT> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">billion of excess capital.</FONT><SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">3</FONT></SUP> </LI></UL>
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     <TD noWrap align=left><B><FONT size=2 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">Net Income</FONT></B>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Net income available to common stockholders of $142.2 million for third quarter 2010 reflects net realized</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">capital losses of $30.9 million, which include:</FONT>&nbsp;</TD></TR></TABLE></DIV>
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<LI><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">$29.1 million of losses related to credit gains and losses on sales and permanent impairments of fixed</FONT> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">maturity securities, including $19.9 million of losses on commercial mortgage backed securities;</FONT>
<LI><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">$7.2 million of losses on commercial mortgage whole loans;</FONT>
<LI><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">$5.6 million of losses on residential mortgage loans; and</FONT>
<LI><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">$7.7 million of gains from the appreciation of fixed maturities designated as trading.</FONT> </LI></UL>
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     <TD style="TEXT-INDENT: 5px" width="100%" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Net income also reflects $48.5 million of one-time after-tax losses from planned severance and goodwill write-</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">off as a result of our exit from the medical insurance business.</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=center><B><I><FONT size=2 face="Times New Roman,BoldItalic,Arial,Helvetica,sans-serif">Segment Highlights</FONT></I></B>&nbsp;</TD></TR>
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     <TD noWrap align=left><B><FONT size=2 face="Times New Roman,Bold,Arial,Helvetica,sans-serif"></FONT></B></TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><B><FONT size=2 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">U.S. Asset Accumulation</FONT></B>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 18px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Segment operating earnings for third quarter 2010 were $147.4 million, compared to $154.6 million for</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">the same period in 2009, as higher earnings from the Full Service Accumulation business were more than offset by</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">lower earnings from the Investment Only and Individual Annuities Businesses. Full Service Accumulation</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">earnings increased 14 percent from a year ago to $80.3 million, reflecting a 9 percent increase in average account</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">values. Principal Funds earnings increased 20 percent from a year ago to $8.5 million, primarily due to a 12 percent</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">increase in average account values. Individual Annuities earnings were $31.9 million compared to $36.1 million</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">for third quarter 2009, mostly due to relatively less favorable DPAC</FONT><SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">4 </FONT></SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">amortization equity market true-ups in the</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">current quarter. Investment Only earnings were $13.9 million for third quarter 2010, compared to $26.0 million for</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">the same period a year ago. The decline is primarily due to a 19 percent drop in average account values, reflecting</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">the company&#146;s scale back of its Investment Only business. In the third quarter 2009, earnings benefitted by $10.8</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">million from the opportunistic early redemption of medium-term notes and an increase in the market value of a</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">receivable.</FONT>&nbsp;</TD></TR>
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     <TD>&nbsp;_________________________</TD></TR>
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     <TD noWrap align=left><SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">3 </FONT></SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Excess capital includes cash at the holding company and capital at the life company above that needed to maintain a 350</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">percent NAIC risk based capital ratio for the life company.</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">4 </FONT></SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Deferred Policy Acquisition Costs</FONT>&nbsp;</TD></TR></TABLE></DIV>
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     <TD style="TEXT-INDENT: 18px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating revenues for the third quarter 2010 were $997.0 million compared to $1,025.6 million for</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">the same period in 2009. Higher revenues for the accumulation businesses</FONT><SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">5 </FONT></SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">, which improved $14.9 million, or 2</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">percent increase from a year ago, were more than offset by a $43.1 million decline in revenues for the Investment</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Only business.</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 18px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Segment assets under management were $168.8 billion as of Sept. 30, 2010, compared to $158.8</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">billion as of Sept. 30, 2009.</FONT>&nbsp;</TD></TR>
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     <TD>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><B><FONT size=2 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">Principal Global Investors</FONT></B>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 15px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Segment operating earnings for third quarter 2010 were $15.0 million, compared to $10.5 million in the</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">prior year quarter, primarily due to increased transaction fees and an increase in assets under management.</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 15px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating revenues for third quarter were $118.0 million, compared to $111.3 million for the same</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">period in 2009, mostly due to higher management fees and a significant increase in transaction fees.</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unaffiliated assets under management were $76.2 billion as of Sept. 30, 2010, compared to $73.2 billion</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">as of Sept. 30, 2009.</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><B><FONT size=2 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">Principal International</FONT></B>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 18px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Segment operating earnings were $33.1 million in third quarter 2010 and 2009, as the increase in fees</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">on higher assets under management and improved macroeconomic conditions offset lower earnings resulting from</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">our reduced economic interest in the Brazilian joint venture.</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 18px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating revenues were $200.1 million for third quarter, compared to $156.1 million for the same period</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">last year, primarily due to higher net investment income from inflation-linked investments in Latin America, the</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">impact of foreign currency movements, and an increase in fees on higher assets under management.</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 18px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Segment assets under management were a record $42.3 billion as of Sept. 30, 2010, compared to</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">$31.4 billion as of Sept. 30, 2009. This includes a record $3.8 billion of net cash flows over the trailing twelve</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">months, or 12 percent of beginning of period assets under management.</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">5 </FONT></SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Full Service Accumulation, Principal Funds, Individual Annuities and Bank and Trust Services</FONT>&nbsp;</TD></TR></TABLE></DIV>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><B><FONT size=2 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">U.S. Insurance Solutions</FONT></B><SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">6</FONT></SUP>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 18px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Segment operating earnings for third quarter 2010 were $47.3 million, compared to $56.2 million for</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">the same period in 2009. Individual Life earnings of $22.6 million were down compared to $29.8 million in</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">third quarter 2009, primarily due to updates to the DPAC model and assumptions. Specialty Benefits earnings</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">were $24.7 million in third quarter 2010, compared to $26.4 million in the same period a year ago, which is in</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">line with membership declines from a year ago.</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 18px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating revenues for third quarter were $690.7 million, compared to $701.4 million for the same</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">period a year ago.</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><B><FONT size=2 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">Corporate</FONT></B>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 18px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating losses for third quarter 2010 were $23.9 million compared to operating losses of $35.3 million</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">in third quarter 2009. Results reflect higher investment returns on excess capital, which were partially offset by the</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">allocation of overhead expenses to Corporate from the medical insurance exit.</FONT>&nbsp;</TD></TR>
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     <TD>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">6 </FONT></SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Prior to third quarter 2010, amounts now reported in the U.S. Insurance Solutions segment and amounts for our group</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">medical business now reported in the Corporate segment were reported together in the Life and Health Insurance</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">segment. This change was made due to our decision to exit the group medical insurance business (insured and</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">administrative services only). Our segment results for 2009 have been restated to conform to the current segment</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">presentation.</FONT>&nbsp;</TD></TR></TABLE></DIV>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><B><FONT size=2 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">Forward looking and cautionary statements</FONT></B>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">This press release contains forward-looking statements, including, without limitation, statements as to operating</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">earnings, net income available to common stockholders, net cash flows, realized and unrealized losses, capital</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">and liquidity positions, sales and earnings trends, and management's beliefs, expectations, goals and opinions.</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">The company does not undertake to update or revise these statements, which are based on a number of</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">assumptions concerning future conditions that may ultimately prove to be inaccurate. Future events and their</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">effects on the company may not be those anticipated, and actual results may differ materially from the results</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">anticipated in these forward-looking statements. The risks, uncertainties and factors that could cause or</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">contribute to such material differences are discussed in the company's annual report on Form 10-K for the year</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">ended December 31, 2009, and in the company&#146;s quarterly report on Form 10-Q for the quarter ended June 30,</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">2010, filed by the company with the Securities and Exchange Commission, as updated or supplemented from</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">time to time in subsequent filings. These risks and uncertainties include, without limitation: adverse capital and</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">credit market conditions that may significantly affect the company&#146;s ability to meet liquidity needs, access to</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">capital and cost of capital; a continuation of difficult conditions in the global capital markets and the general</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">economy that may materially adversely affect the company&#146;s business and results of operations; the actions of</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">the U.S. government, Federal Reserve and other governmental and regulatory bodies for purposes of stabilizing</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">the financial markets might not achieve the intended effect; the risk from acquiring new businesses, which could</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">result in the impairment of goodwill and/or intangible assets recognized at the time of acquisition; impairment of</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">other financial institutions that could adversely affect the company; investment risks which may diminish the</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">value of the company&#146;s invested assets and the investment returns credited to customers, which could reduce</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">sales, revenues, assets under management and net income; requirements to post collateral or make payments</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">related to declines in market value of specified assets may adversely affect company liquidity and expose the</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">company to counterparty credit risk; changes in laws, regulations or accounting standards that may reduce</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">company profitability; fluctuations in foreign currency exchange rates that could reduce company profitability;</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Principal Financial Group, Inc.&#146;s primary reliance, as a holding company, on dividends from its subsidiaries to</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">meet debt payment obligations and regulatory restrictions on the ability of subsidiaries to pay such dividends;</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">competitive factors; volatility of financial markets; decrease in ratings; interest rate changes; inability to attract</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">and retain sales representatives; international business risks; a pandemic, terrorist attack or other catastrophic</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">event; and default of the company&#146;s re-insurers.</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><B><FONT size=2 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">Use of Non-GAAP Financial Measures</FONT></B>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">The company uses a number of non-GAAP financial measures that management believes are useful to investors</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">because they illustrate the performance of normal, ongoing operations, which is important in understanding and</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">evaluating the company&#146;s financial condition and results of operations. They are not, however, a substitute for U.S.</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">GAAP financial measures. Therefore, the company has provided reconciliations of the non-GAAP measures to the</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">most directly comparable U.S. GAAP measure at the end of the release. The company adjusts U.S. GAAP</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">measures for items not directly related to ongoing operations. However, it is possible these adjusting items have</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">occurred in the past and could recur in the future reporting periods. Management also uses non-GAAP measures</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">for goal setting, as a basis for determining employee and senior management awards and compensation, and</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">evaluating performance on a basis comparable to that used by investors and securities analysts.</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><B><FONT size=3 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">Earnings Conference Call</FONT></B>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">On Tuesday, Nov. 2, 2010 at 10:00 a.m. (ET), Chairman, President and Chief Executive Officer Larry</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Zimpleman and Senior Vice President and Chief Financial Officer Terry Lillis will lead a discussion of results,</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">asset quality and capital adequacy during a live conference call, which can be accessed as follows:</FONT>&nbsp;</TD></TR></TABLE></DIV>
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<UL>
<LI><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Via live Internet webcast. Please go to </FONT><U><FONT color=#0000ff size=2 face="Times New Roman,Arial,Helvetica,sans-serif">www.principal.com/investor </FONT></U><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">at least 10-15 minutes prior to the start</FONT> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">of the call to register, and to download and install any necessary audio software.</FONT>
<LI><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Via telephone by dialing 800-374-1609 (U.S. and Canadian callers) or 706-643-7701 (International callers)</FONT> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">approximately 10 minutes prior to the start of the call. The access code is 16027050.</FONT> </LI></UL></DIV>
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     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Page 8</FONT><FONT size=2>&nbsp;</FONT></TD></TR></TABLE></DIV>
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     <TD width="98%" colSpan=2><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Replay of the earnings call via telephone is available by dialing 800-642-1687 (U.S. and Canadian callers) or</FONT> </TD></TR>
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     <TD width="98%" colSpan=2><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">706-645-9291</FONT> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">(International callers). The access code is 16027050. This replay will be available</FONT> </TD></TR>
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     <TD width="2%">&nbsp;</TD>
     <TD width="98%" colSpan=2><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">approximately</FONT> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">two hours after the completion of the live earnings call through the end of day Nov. 9, 2010.</FONT> </TD></TR>
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     <TD width="98%" colSpan=2><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Replay of the earnings call via webcast as well as a transcript of the call is available after the call at:</FONT> </TD></TR>
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     <TD width="2%">&nbsp;</TD>
     <TD width="98%" colSpan=2><U><FONT color=#0000ff size=2 face="Times New Roman,Arial,Helvetica,sans-serif">www.</FONT></U><U><FONT color=#0000ff size=2 face="Times New Roman,Arial,Helvetica,sans-serif">principal.com/investor</FONT></U><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">.</FONT> </TD></TR></TABLE>
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     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">The company's financial supplement and additional investment portfolio detail for third quarter 2010 is</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">currently available at </FONT><FONT color=#0000ff size=2 face="Times New Roman,Arial,Helvetica,sans-serif"><U>www.principal.com/investor</U></FONT><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">, and may be referred to during the call.</FONT>&nbsp;</TD></TR>
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     <TD>&nbsp;</TD></TR>
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     <TD noWrap align=left><B><FONT size=2 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">2010 Investor Day and 2011 EPS guidance</FONT></B>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">The Principal will hold its Investor Day on Dec. 9, 2010 in New York. Details can be found at</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT color=#0000ff size=2 face="Times New Roman,Arial,Helvetica,sans-serif"><U>www.principal.com/investor</U>. </FONT><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">In addition, The Principal plans to announce guidance prior to Investor Day</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">through a press release and a conference call.</FONT>&nbsp;</TD></TR>
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     <TD>&nbsp;</TD></TR>
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     <TD noWrap align=left><B><FONT size=2 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">About the Principal Financial Group</FONT></B>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">The Principal Financial Group</FONT><SUP><FONT size=2 face=Symbol,Symbol>&#210; </FONT></SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">(The Principal </FONT><SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">&#174; </FONT></SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">)</FONT><SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">7 </FONT></SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">is a leader in offering businesses, individuals and institutional</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">clients a wide range of financial products and services, including retirement and investment services, life and</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">health insurance, and banking through its diverse family of financial services companies. A member of the</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Fortune 500, the Principal Financial Group has $305.7 billion in assets under management</FONT><SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">8 </FONT></SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">and serves some 18.9</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States.</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">more information, visit </FONT><FONT color=#0000ff size=2 face="Times New Roman,Arial,Helvetica,sans-serif"><U>www.principal.com</U></FONT><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">.</FONT>&nbsp;</TD></TR>
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     <TD align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ###</FONT></TD></TR>
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     <TD noWrap align=left><SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">7 </FONT></SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">&#147;The Principal Financial Group</FONT><SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">&#148; </FONT></SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">and &#147;The Principal&#148; are registered service marks of Principal Financial Services,</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Inc., a member of the Principal Financial Group.</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">8 </FONT></SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">As of Sept 30, 2010</FONT>&nbsp;</TD></TR></TABLE></DIV>
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     <TD width="100%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=2 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">*Operating earnings versus U.S. GAAP (GAAP) net income available to common stockholders</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Management uses operating earnings, which excludes the effect of net realized capital gains and losses, as adjusted, and other after-tax</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">adjustments, for goal setting, as a basis for determining employee compensation, and evaluating performance on a basis comparable to</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">that used by investors and securities analysts. Segment operating earnings are determined by adjusting U.S. GAAP net income available</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">to common stockholders for net realized capital gains and losses, as adjusted, and other after-tax adjustments the company believes are</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">not indicative of overall operating trends. Note: it is possible these adjusting items have occurred in the past and could recur in future</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">reporting periods. While these items may be significant components in understanding and assessing our consolidated financial</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">performance, management believes the presentation of segment operating earnings enhances the understanding of results of operations</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">by highlighting earnings attributable to the normal, ongoing operations of the company&#146;s businesses.</FONT>&nbsp;</TD></TR></TABLE></DIV>
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thirdqter10.htm - Generated by SEC Publisher for SEC Filing
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report:
November 1, 2010
(Date of earliest event reported)
PRINCIPAL FINANCIAL GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware
1-16725
42-1520346
(State or other jurisdiction
(Commission file number)
(I.R.S. Employer
of incorporation)
Identification Number)
711 High Street, Des Moines, Iowa 50392
(Address of principal executive offices)
(515) 247-5111
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the
registrant under any of the following provisions:
[     ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[     ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[     ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
[     ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
__________________
Page 2
Item 2.02. Results of Operations and Financial Condition
On November 1, 2010, Principal Financial Group, Inc. publicly announced information regarding its
results of operations and financial condition for the quarter ended September 30, 2010. The text of the
announcement is included herewith as Exhibit 99.
Item 9.01 Financial Statements and Exhibits
99
Third Quarter 2010 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/ Terrance J. Lillis
___________________
Name:   Terrance J. Lillis
Title:      Senior Vice President and Chief Financial Officer
Date: November 2, 2010
Page 3
EXHIBIT 99
Release:
On receipt, November 1, 2010
Media contact:
Susan Houser, 515-248-2268
,
mail to: houser.susan@principal.com
Investor contact:
John Egan, 515-235-9500,
mail to: egan.john@principal.com
Principal Financial Group, Inc. Announces Third Quarter 2010 Results
Third quarter 2010 operating earnings
1
of $218.9 million, net income available to common
stockholders of $142.2 million
Assets under management of $305.7 billion increased 9 percent compared to third quarter
2009
Book value per share, excluding AOCI
2
increased to a record high of $27.71, up 5 percent
over third quarter 2009 and 1 percent sequentially
Operating revenues increased 1 percent to $1,986.7 million, compared to third quarter 2009
(Des Moines, Iowa) – Principal Financial Group, Inc. (NYSE: PFG) today announced results for third quarter
2010. The company reported operating earnings of $218.9 million for third quarter 2010, compared to $219.1
million for third quarter 2009. Operating earnings per diluted share (EPS) were $0.68 for the third quarter 2010 and
2009. The company reported net income available to common stockholders of $142.2 million, or $0.44 per diluted
share for the three months ended Sept. 30, 2010, compared to $184.7 million, or $0.57 per diluted share for the
three months ended Sept. 30, 2009. Operating revenues for third quarter 2010 were $1,986.7 million compared to
$1,961.0 million for the same period last year.
"The Principal
®
continued to deliver strong financial results during the third quarter. Compared to 2009,
on a year-to-date basis, operating earnings are up 19 percent while average assets under management are up 12
percent. This reflects strong execution in an economic environment that is improving slowly. Importantly, we're
seeing increasing signs of growth across our businesses. Highlights for the quarter include strong net cash flow
in Principal Funds, Principal Global Investors and Principal International," said Larry D. Zimpleman, chairman,
president and chief executive officer of Principal Financial Group, Inc. "Our hybrid business model of asset
management and risk-based products, combined with our leadership position in the U.S. and strong presence in
select international markets, uniquely positions The Principal to help a growing middle income customer base
achieve financial security and success."
"Despite the choppy economic recovery, our results in the third quarter demonstrate that our businesses
continue to grow and we are excited about our prospects going forward," said Terry Lillis, senior vice president and
chief financial officer. "During the third quarter and now early into our second month of the fourth quarter, we are
seeing positive sales momentum and are confident we will finish 2010 with Full Service Accumulation sales 15-20
percent higher than 2009 year-end sales, resulting in positive cash flows. Overall, our diversified businesses and
geography mix, strong balance sheet and continued expense management have and will continue to serve us well."
________________________
1
Use of non-GAAP financial measures is discussed in this release after Segment Highlights
2
Accumulated Other Comprehensive Income
Page 4
Key Highlights
Principal International had record assets under management as of Sept. 30, 2010 of $42.3 billion and $1.0
billion in net positive cash flow in the third quarter.
Solid sales of the company's three key U.S. retirement and investment products in the third quarter, with
$864 million for Full Service Accumulation, $2.5 billion for Principal Funds and $364 million for Individual
Annuities.
Record net cash flow in Principal Funds of $790 million in the third quarter.
Principal Global Investors had unaffiliated net cash flow of $800 million in third quarter.
Continued strong operating leverage, reflected in a 19 percent growth in operating earnings through nine
months compared to 12 percent growth in average assets under management.
Strong capital and liquidity, with an estimated risk based capital ratio of 450 percent at quarter-end and $2.2
billion of excess capital.
3
Net Income
Net income available to common stockholders of $142.2 million for third quarter 2010 reflects net realized
capital losses of $30.9 million, which include:
$29.1 million of losses related to credit gains and losses on sales and permanent impairments of fixed
maturity securities, including $19.9 million of losses on commercial mortgage backed securities;
$7.2 million of losses on commercial mortgage whole loans;
$5.6 million of losses on residential mortgage loans; and
$7.7 million of gains from the appreciation of fixed maturities designated as trading.
Net income also reflects $48.5 million of one-time after-tax losses from planned severance and goodwill write-
off as a result of our exit from the medical insurance business.
Segment Highlights
U.S. Asset Accumulation
Segment operating earnings for third quarter 2010 were $147.4 million, compared to $154.6 million for
the same period in 2009, as higher earnings from the Full Service Accumulation business were more than offset by
lower earnings from the Investment Only and Individual Annuities Businesses. Full Service Accumulation
earnings increased 14 percent from a year ago to $80.3 million, reflecting a 9 percent increase in average account
values. Principal Funds earnings increased 20 percent from a year ago to $8.5 million, primarily due to a 12 percent
increase in average account values. Individual Annuities earnings were $31.9 million compared to $36.1 million
for third quarter 2009, mostly due to relatively less favorable DPAC
4
amortization equity market true-ups in the
current quarter. Investment Only earnings were $13.9 million for third quarter 2010, compared to $26.0 million for
the same period a year ago. The decline is primarily due to a 19 percent drop in average account values, reflecting
the company's scale back of its Investment Only business. In the third quarter 2009, earnings benefitted by $10.8
million from the opportunistic early redemption of medium-term notes and an increase in the market value of a
receivable.
_________________________
3
Excess capital includes cash at the holding company and capital at the life company above that needed to maintain a 350
percent NAIC risk based capital ratio for the life company.
4
Deferred Policy Acquisition Costs
Page 5
Operating revenues for the third quarter 2010 were $997.0 million compared to $1,025.6 million for
the same period in 2009. Higher revenues for the accumulation businesses
5
, which improved $14.9 million, or 2
percent increase from a year ago, were more than offset by a $43.1 million decline in revenues for the Investment
Only business.
Segment assets under management were $168.8 billion as of Sept. 30, 2010, compared to $158.8
billion as of Sept. 30, 2009.
Principal Global Investors
Segment operating earnings for third quarter 2010 were $15.0 million, compared to $10.5 million in the
prior year quarter, primarily due to increased transaction fees and an increase in assets under management.
Operating revenues for third quarter were $118.0 million, compared to $111.3 million for the same
period in 2009, mostly due to higher management fees and a significant increase in transaction fees.
Unaffiliated assets under management were $76.2 billion as of Sept. 30, 2010, compared to $73.2 billion
as of Sept. 30, 2009.
Principal International
Segment operating earnings were $33.1 million in third quarter 2010 and 2009, as the increase in fees
on higher assets under management and improved macroeconomic conditions offset lower earnings resulting from
our reduced economic interest in the Brazilian joint venture.
Operating revenues were $200.1 million for third quarter, compared to $156.1 million for the same period
last year, primarily due to higher net investment income from inflation-linked investments in Latin America, the
impact of foreign currency movements, and an increase in fees on higher assets under management.
Segment assets under management were a record $42.3 billion as of Sept. 30, 2010, compared to
$31.4 billion as of Sept. 30, 2009. This includes a record $3.8 billion of net cash flows over the trailing twelve
months, or 12 percent of beginning of period assets under management.
5
Full Service Accumulation, Principal Funds, Individual Annuities and Bank and Trust Services
Page 6
U.S. Insurance Solutions
6
Segment operating earnings for third quarter 2010 were $47.3 million, compared to $56.2 million for
the same period in 2009. Individual Life earnings of $22.6 million were down compared to $29.8 million in
third quarter 2009, primarily due to updates to the DPAC model and assumptions. Specialty Benefits earnings
were $24.7 million in third quarter 2010, compared to $26.4 million in the same period a year ago, which is in
line with membership declines from a year ago.
Operating revenues for third quarter were $690.7 million, compared to $701.4 million for the same
period a year ago.
Corporate
Operating losses for third quarter 2010 were $23.9 million compared to operating losses of $35.3 million
in third quarter 2009. Results reflect higher investment returns on excess capital, which were partially offset by the
allocation of overhead expenses to Corporate from the medical insurance exit.
6
Prior to third quarter 2010, amounts now reported in the U.S. Insurance Solutions segment and amounts for our group
medical business now reported in the Corporate segment were reported together in the Life and Health Insurance
segment. This change was made due to our decision to exit the group medical insurance business (insured and
administrative services only). Our segment results for 2009 have been restated to conform to the current segment
presentation.
Page 7
Forward looking and cautionary statements
This press release contains forward-looking statements, including, without limitation, statements as to operating
earnings, net income available to common stockholders, net cash flows, realized and unrealized losses, capital
and liquidity positions, sales and earnings trends, and management's beliefs, expectations, goals and opinions.
The company does not undertake to update or revise these statements, which are based on a number of
assumptions concerning future conditions that may ultimately prove to be inaccurate. Future events and their
effects on the company may not be those anticipated, and actual results may differ materially from the results
anticipated in these forward-looking statements. The risks, uncertainties and factors that could cause or
contribute to such material differences are discussed in the company's annual report on Form 10-K for the year
ended December 31, 2009, and in the company's quarterly report on Form 10-Q for the quarter ended June 30,
2010, filed by the company with the Securities and Exchange Commission, as updated or supplemented from
time to time in subsequent filings. These risks and uncertainties include, without limitation: adverse capital and
credit market conditions that may significantly affect the company's ability to meet liquidity needs, access to
capital and cost of capital; a continuation of difficult conditions in the global capital markets and the general
economy that may materially adversely affect the company's business and results of operations; the actions of
the U.S. government, Federal Reserve and other governmental and regulatory bodies for purposes of stabilizing
the financial markets might not achieve the intended effect; the risk from acquiring new businesses, which could
result in the impairment of goodwill and/or intangible assets recognized at the time of acquisition; impairment of
other financial institutions that could adversely affect the company; investment risks which may diminish the
value of the company's invested assets and the investment returns credited to customers, which could reduce
sales, revenues, assets under management and net income; requirements to post collateral or make payments
related to declines in market value of specified assets may adversely affect company liquidity and expose the
company to counterparty credit risk; changes in laws, regulations or accounting standards that may reduce
company profitability; fluctuations in foreign currency exchange rates that could reduce company profitability;
Principal Financial Group, Inc.'s primary reliance, as a holding company, on dividends from its subsidiaries to
meet debt payment obligations and regulatory restrictions on the ability of subsidiaries to pay such dividends;
competitive factors; volatility of financial markets; decrease in ratings; interest rate changes; inability to attract
and retain sales representatives; international business risks; a pandemic, terrorist attack or other catastrophic
event; and default of the company's re-insurers.
Use of Non-GAAP Financial Measures
The company uses a number of non-GAAP financial measures that management believes are useful to investors
because they illustrate the performance of normal, ongoing operations, which is important in understanding and
evaluating the company's financial condition and results of operations. They are not, however, a substitute for U.S.
GAAP financial measures. Therefore, the company has provided reconciliations of the non-GAAP measures to the
most directly comparable U.S. GAAP measure at the end of the release. The company adjusts U.S. GAAP
measures for items not directly related to ongoing operations. However, it is possible these adjusting items have
occurred in the past and could recur in the future reporting periods. Management also uses non-GAAP measures
for goal setting, as a basis for determining employee and senior management awards and compensation, and
evaluating performance on a basis comparable to that used by investors and securities analysts.
Earnings Conference Call
On Tuesday, Nov. 2, 2010 at 10:00 a.m. (ET), Chairman, President and Chief Executive Officer Larry
Zimpleman and Senior Vice President and Chief Financial Officer Terry Lillis will lead a discussion of results,
asset quality and capital adequacy during a live conference call, which can be accessed as follows:
Via live Internet webcast. Please go to
www.principal.com/investor
at least 10-15 minutes prior to the start
of the call to register, and to download and install any necessary audio software.
Via telephone by dialing 800-374-1609 (U.S. and Canadian callers) or 706-643-7701 (International callers)
approximately 10 minutes prior to the start of the call. The access code is 16027050.
Page 8
Replay of the earnings call via telephone is available by dialing 800-642-1687 (U.S. and Canadian callers) or
706-645-9291
(International callers). The access code is 16027050. This replay will be available
approximately
two hours after the completion of the live earnings call through the end of day Nov. 9, 2010.
Replay of the earnings call via webcast as well as a transcript of the call is available after the call at:
www.
principal.com/investor
.
The company's financial supplement and additional investment portfolio detail for third quarter 2010 is
currently available at
www.principal.com/investor
, and may be referred to during the call.
2010 Investor Day and 2011 EPS guidance
The Principal will hold its Investor Day on Dec. 9, 2010 in New York. Details can be found at
www.principal.com/investor
.
In addition, The Principal plans to announce guidance prior to Investor Day
through a press release and a conference call.
About the Principal Financial Group
The Principal Financial Group
Ò
(The Principal
®
)
7
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 $305.7 billion in assets under management
8
and serves some 18.9
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
"The Principal Financial Group
"
and "The Principal" are registered service marks of Principal Financial Services,
Inc., a member of the Principal Financial Group.
8
As of Sept 30, 2010
Page 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 capital gains and losses, as adjusted, and other after-tax
adjustments, for goal setting, as a basis for determining employee compensation, and evaluating performance on a basis comparable to
that used by investors and securities analysts. Segment operating earnings are determined by adjusting U.S. GAAP net income available
to common stockholders for net realized capital gains and losses, as adjusted, and other after-tax adjustments the company believes are
not indicative of overall operating trends. Note: 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 results of operations
by highlighting earnings attributable to the normal, ongoing operations of the company's businesses.
Page 10
Page 11