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 6, 2006
                        (Date of earliest event reported)



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


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


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

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

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

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

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


<PAGE>

ITEM 2.02.  RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On  February  6,  2006,  Principal  Financial  Group,  Inc.  publicly  announced
information  regarding its results of operations and financial condition for the
quarter  ended  December  31,  2005.  The text of the  announcement  is included
herewith as Exhibit 99.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

99 Fourth Quarter 2005 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 7, 2006


                                       2
<PAGE>

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


       PRINCIPAL FINANCIAL GROUP, INC. REPORTS FOURTH QUARTER 2005 RESULTS

Des Moines, IA (February 6, 2006) - Principal  Financial Group, Inc. (NYSE: PFG)
today announced net income available to common stockholders for the three months
ended December 31, 2005, of $246.9 million,  or $0.87 per diluted share compared
to $213.5  million,  or $0.70 per  diluted  share  for the  three  months  ended
December 31, 2004. The company reported operating earnings of $217.9 million for
fourth  quarter 2005,  compared to $199.7  million for fourth  quarter  2004(1).
Operating  earnings per diluted  share (EPS) for fourth  quarter 2005 were $0.77
compared to $0.66 for the same  period in 2004.  Operating  revenues  for fourth
quarter 2005 were  $2,470.8  million  compared to $2,215.7  million for the same
period last year.(2)

"We  entered  2005 faced with a number of  familiar  challenges,"  said J. Barry
Griswell,  chairman and chief  executive  officer.  "A difficult  equity  market
environment,  continuously  evolving customer needs, and a very high performance
bar - a track  record set over our first  three years as a public  company  that
included a 10 percent  compounded annual growth rate for operating  earnings,  a
$70 billion increase in assets under management,  and an average  improvement of
more than 110 basis points per year in return on equity."

"Importantly,  we delivered another very strong result. In 2005, we achieved our
seventh consecutive year of record operating  earnings,  up 13 percent from 2004
to $862 million, reflecting record performance in all three operating segments,"
said  Griswell.   "Strong  earnings,   combined  with  strategic  use  of  share
repurchases,  drove EPS up 22 percent to a record $2.97, including record fourth
quarter  earnings  per share of $0.77,  a 17 percent  improvement.  We also grew
assets  under  management  by $28 billion in 2005,  and  improved  our return on
equity by 150 basis points,  reaching  13.8 percent as of year-end."

Additional highlights for the fourth quarter and full year 2005 include:

o    Record net  income  available  to common  stockholders  of $901.3  million,
     driving  net income per  diluted  share up 19 percent to a record  $3.11 in
     2005.
o    Record assets under management (AUM) of $195.2 billion,  up 17 percent from
     2004,  including  organic growth of 33 percent for Principal  International
     and 25 percent for Principal Global Investors' third party AUM.
o    Record full service  accumulation  account values of $77.3  billion,  up 12
     percent from a year ago, and record full service  accumulation  deposits of
     $15.4 billion in 2005, an increase of 15 percent.
o    Record sales for each of the company's  three key retirement and investment
     products in 2005,  including:  $3.4 billion for mutual funds;  $2.0 billion
     for  individual  annuities;  and $6.1  billion  for  organic  full  service
     accumulation,  including $1.6 billion in the fourth  quarter,  a 17 percent
     increase for both periods.

                                       3
<PAGE>

"Our  ability  to again  deliver  sustainable,  profitable  growth,  even  under
difficult  conditions,  reflects our  discipline and strong focus on meeting the
changing  needs  of  our  customers,"  said  Griswell.  "Employers  continue  to
recognize  the  importance  of employee  benefits in  attracting  and  retaining
employees - but increasingly they're looking for more cost-effective options and
shifting  decision-making and financial  responsibilities to employees. In turn,
employees are  increasingly  seeking  education,  guidance,  and  "do-it-for-me"
solutions  as they take a more  active  interest  in  building  their  financial
security."

"In 2005,  we continued to invest in our  portfolio  of worksite  solutions:  we
enhanced  our array of  bundled  offerings  such as Total  Retirement  Suite SM,
helping employers reduce  administrative burden and costs; we expanded access to
personalized  investment advice for retirement plan  participants;  we developed
new  retirement  income  management  solutions for  retirees;  we added new cost
effective health and voluntary benefits offerings; and we significantly expanded
our educational  resources to help employers meet their  fiduciary  obligations,
and to help  employees  improve  their  health and  financial  well being," said
Griswell.

"Our  ongoing   investment  in  helping  customers  achieve  financial  security
continues to drive strong and improving retention across our businesses, as well
as tremendous  sales  success," said Griswell.  "Combined sales of our three key
retirement and investment products - full service accumulation, mutual funds and
individual annuities - reached a record $11.5 billion for the year, a 13 percent
increase.  We also  achieved a fourth  consecutive  year of record  sales in our
Specialty Benefits division, an increase of 23 percent."

"2005 was another  year of strong  execution,  a year in which we  continued  to
differentiate The Principal in the marketplace and to strengthen our competitive
position,"  said  Griswell.   "We  are  highly   optimistic   about  the  growth
opportunities across our businesses, and in 2006, we'll continue to leverage our
strengths and execute our  customer-focused  strategy to deliver long-term value
for shareholders."

                               SEGMENT HIGHLIGHTS

U.S. ASSET MANAGEMENT AND ACCUMULATION
Segment operating earnings for fourth quarter 2005 were $136.0 million, compared
to  $134.3  million  for the same  period  in 2004.  Full  service  accumulation
earnings  were a record $66.1 million in fourth  quarter 2005.  This compares to
$64.6 million in fourth quarter 2004,  which included a $6.2 million tax benefit
for a special  dividend  received.  The  increase in full  service  accumulation
earnings was  primarily  due to increased  fees  generated  from higher  account
values.  Full  service  accumulation  account  values  were $77.3  billion as of
December 31, 2005 compared to $68.9 billion as of December 31, 2004.

Operating  revenues for fourth quarter  increased 18 percent to $1,195.4 million
from $1,010.5 million for the same period in 2004, primarily due to higher sales
of single premium group annuities. The single premium product, typically used to
fund defined  benefit  terminations,  can generate  large premiums from very few
customers and therefore causes revenues to vary from period to period. Excluding


                                       4
<PAGE>

this product,  segment revenues increased 6 percent due to increased fees in the
full service accumulation and Principal Global Investors' operations.

Assets  under  management  for the segment  were a record  $164.3  billion as of
December 31, 2005,  compared to $159.0  billion as of  September  30, 2005,  and
compared to $142.1 billion as of December 31, 2004.

INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION
Segment operating  earnings for fourth quarter 2005 were a record $22.7 million,
compared  to $11.5  million  for the  same  period a year  ago,  reflecting  tax
benefits of $13.0 million, including an $8.7 million tax benefit associated with
the  liquidation  of  defined  contribution   operations  in  Japan.   Partially
offsetting fourth quarter 2005 tax benefits was some  discretionary  expenditure
on marketing,  advertising  and sales  training  during the quarter,  as well as
costs associated with the Japan liquidation.

Operating  revenues for fourth quarter were $165.1  million,  compared to $147.1
million for the same period a year ago reflecting strong growth in Hong Kong and
India, and favorable currency translation in Chile, Mexico, and Brazil.

Assets  under  management  for the  segment  were a record  $15.4  billion as of
December  31, 2005,  compared to $14.7  billion as of  September  30, 2005,  and
compared to $10.2 billion as of December 31, 2004.(3)

LIFE AND HEALTH INSURANCE
Segment operating earnings for fourth quarter 2005 were $63.2 million,  compared
to $52.9 million for the same period in 2004,  primarily due to solid growth and
improved loss ratios in the Health and Specialty Benefits divisions.

Operating  revenues  increased  to a record  $1,123.3  million for the  quarter,
compared  to  $1,063.5  million  for the same  period in 2004.  Revenues  in the
Specialty  Benefits  division  increased 13 percent,  driven by strong sales and
steady  retention  in each of the  division's  product  lines.  Health  revenues
improved 8 percent,  primarily  reflecting an increase in group medical  covered
members and higher  premium per member.  Individual  Life  revenues  decreased 3
percent,  as  the  company  continued  its  shift  in  marketing  emphasis  from
traditional  premium-based  products to  fee-based  universal  life and variable
universal life products.  Unlike traditional  premium-based products,  universal
life and variable universal life deposits are not reported as GAAP revenue.


                                       5
<PAGE>

CORPORATE AND OTHER
Operating  losses  for  fourth  quarter  2005 were  $4.0  million,  compared  to
operating  earnings  of $1.0  million  for the  same  period  in  2004.  Because
corporate  operations are varied,  many items  contribute to this variance.  The
primary  contributor  to the decline was the  declaration  of the fourth quarter
2005 preferred stock dividend. This $8.3 million cost reduced operating earnings
within the Corporate segment with no corresponding  activity in the year earlier
period.  Partially  offsetting this cost was reduced interest expense on federal
income tax matters.

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 our
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 that these adjusting items have occurred in the past and could recur
in the  future.  Management  also  uses  non-GAAP  measures  for  goal  setting,
determining  employee  and  senior  management  awards  and  compensation,   and
evaluating  performance  on a basis  comparable  to that used by  investors  and
securities analysts.

FORWARD LOOKING AND CAUTIONARY STATEMENTS
This press release may contain forward-looking  statements,  including,  without
limitation,  statements  as to sales  targets,  sales and earnings  trends,  and
management's  beliefs,  expectations,  goals and opinions.  These statements are
based  on  a  number  of  assumptions  concerning  future  conditions  that  may
ultimately  prove to be  inaccurate.  Future  events  and their  effects  on the
company may not be those  anticipated,  and actual results may differ materially
from the results  anticipated in these  forward-looking  statements.  The risks,
uncertainties  and  factors  that could  cause or  contribute  to such  material
differences  are discussed in the  company's  annual report on Form 10-K for the
year ended December 31, 2004, and in the company's quarterly report on Form 10-Q
for the quarter ended September 30, 2005, filed with the Securities and Exchange
Commission.   These  risks  and  uncertainties   include,   without  limitation:
competitive  factors;  volatility  of  financial  markets;  decrease in ratings;
interest  rate changes;  inability to attract and retain sales  representatives;
international  business risks; foreign currency exchange rate fluctuations;  and
investment portfolio risks.

SHARE REPURCHASES
In June 2005, following the Board's share repurchase authorization of up to 15.0
million  shares,  the  company  entered  into an  accelerated  stock  repurchase
agreement  with a third party  investment  bank for  approximately  13.7 million
shares of Principal  Financial Group,  Inc. common stock with an initial payment
of $542.3  million,  using cash  proceeds  from the  company's  June issuance of
perpetual  preferred  stock.  The  transaction  was  subject  to a market  price
adjustment  provision based on the volume weighted average market price over the
execution  period,  which was settled in cash for $84.0  million on November 16,
2005. In the fourth quarter 2005, the company did not repurchase any shares from
the Board's  November 2005 $250 million  authorization,  but  repurchased  $50.0
million of shares under that program through February 1, 2006.

STOCK OPTIONS
The Principal  expenses  employee  stock options and the employee stock purchase
plan,  resulting  in an  after-tax  expense of $5.1  million and $21.3  million,
respectively  for the three and twelve months ended December 31, 2005,  compared
to $5.6 million and $22.4 million,  respectively for the three and twelve months
ended December 31, 2004.

                                       6
<PAGE>

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  during  a live
conference call. Parties interested in listening to the conference call live may
access  the  webcast  on  the   company's   Investor   Relations   (IR)  website
(www.principal.com/investor)  or by dialing  (800)  374-1609  (U.S.  callers) or
(706) 643-7701  (International  callers)  approximately  10 minutes prior to the
start of the call.  To access the call,  leader name is Tom Graf.  Listeners can
access  an audio  replay  of the call on the IR  website,  or by  calling  (800)
642-1687 (US callers) or (706) 645-9291 (International callers). The access code
for the replay is 3370203.  Replays will be available through February 14, 2006.
The  financial  supplement  is  currently  available  on our  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 $195.2
billion in assets under  management(5)  and serves some 15.6  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>

SUMMARY OF SEGMENT AND PRINCIPAL FINANCIAL GROUP, INC. RESULTS

<TABLE>
<CAPTION>


                                                              OPERATING EARNINGS (LOSSES)* IN MILLIONS
                                                     -------------------------------------------------------------
                                                           THREE MONTHS ENDED,             TWELVE MONTHS ENDED,
<S>                                                          <C>            <C>            <C>             <C>
                                            SEGMENT       12/31/05       12/31/04       12/31/05        12/31/05
---------------------------------------------------- --------------- -------------- -------------- ---------------
             U.S. ASSET MANAGEMENT AND ACCUMULATION          $136.0         $134.3         $538.4          $499.0
---------------------------------------------------- --------------- -------------- -------------- ---------------
    INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION            22.7           11.5           71.0            40.3
---------------------------------------------------- --------------- -------------- -------------- ---------------
                          LIFE AND HEALTH INSURANCE            63.2           52.9          274.4           256.2
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                   MORTGAGE BANKING              -              -              -            (10.3)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                CORPORATE AND OTHER            (4.0)           1.0          (21.4)          (20.4)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                 OPERATING EARNINGS           217.9          199.7          862.4           764.8
---------------------------------------------------- --------------- -------------- -------------- ---------------
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS (LOSSES), AS ADJUSTED           (15.9)          15.9          (20.6)          (62.3)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                        OTHER AFTER-TAX ADJUSTMENTS            44.9           (2.1)          59.5           123.1
---------------------------------------------------- --------------- -------------- -------------- ---------------
        NET INCOME AVAILABLE TO COMMON STOCKHOLDERS          $246.9         $213.5         $901.3          $825.6

</TABLE>

<TABLE>
<CAPTION>
                                                                    PER DILUTED EARNINGS PER SHARE
                                                                   AVAILABLE TO COMMON STOCKHOLDERS

                                                          THREE MONTHS ENDED,           TWELVE MONTHS ENDED,
                                                         12/31/05       12/31/04       12/31/05        12/31/04
<S>                                                      <C>               <C>            <C>            <C>
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                 OPERATING EARNINGS      $  0.77           $  0.66        $  2.97        $   2.43
---------------------------------------------------- --------------- -------------- -------------- ---------------
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS (LOSSES), AS ADJUSTED        (0.06)             0.05          (0.06)          (0.20)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                        OTHER AFTER-TAX ADJUSTMENTS         0.16             (0.01)          0.20            0.39
---------------------------------------------------- --------------- -------------- -------------- ---------------
        NET INCOME AVAILABLE TO COMMON STOCKHOLDERS      $  0.87           $  0.70        $  3.11        $   2.62
---------------------------------------------------- --------------- -------------- -------------- ---------------
 WEIGHTED-AVERAGE DILUTED COMMON SHARES OUTSTANDING       282.9             304.7          289.9           314.7

</TABLE>

<*Operating earnings versus U.S. GAAP (GAAP) net income

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

                                       8
<PAGE>

<TABLE>
<CAPTION>

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

                                                       THREE MONTHS ENDED              TWELVE MONTHS ENDED
                                                 ---------------- --------------- --------------- ---------------
                                                       12/31/05         12/31/04        12/31/05        12/31/04
                                                 ---------------- --------------- --------------- ---------------
   <S>                                                  <C>             <C>             <C>             <C>
   Premiums and other considerations                    $1,148.6        $  973.2        $3,975.0        $3,710.0
   Fees and other revenues                                 437.4           411.6         1,683.2         1,472.0
   Net investment income                                   877.3           827.6         3,360.7         3,224.0
   Net realized/unrealized capital gains                   (18.1)           25.3           (11.2)         (104.8)
   (losses)                                      ---------------- --------------- --------------- ---------------
   TOTAL REVENUES                                        2,445.2         2,237.7         9,007.7         8,301.2
                                                 ---------------- --------------- --------------- ---------------
   Benefits, claims, and settlement expenses
                                                         1,502.8         1,314.3         5,282.9         4,959.5
   Dividends to policyholders                               74.0            77.0           293.0           296.7
   Operating expenses                                      593.0           572.0         2,307.5         2,165.9
                                                 ---------------- --------------- --------------- ---------------
   TOTAL EXPENSES                                        2,169.8         1,963.3         7,883.4         7,422.1
                                                 ---------------- --------------- --------------- ---------------
   Income from continuing operations before
        income taxes                                       275.4           274.4         1,124.3           879.1
   Income taxes                                             31.3            59.4           232.4           178.2
                                                 ---------------- --------------- --------------- ---------------
   Income from continuing operations, net of
        related income taxes                               244.1           215.0           891.9           700.9
   Income (loss) from discontinued operations,
        net of related taxes                                11.1           (1.5)            27.1           130.4
                                                 ---------------- --------------- --------------- ---------------
   Income before cumulative effect of
        accounting change                                  255.2           213.5           919.0           831.3
   Cumulative effect of accounting change, net
        of related income taxes                              -               -               -              (5.7)
                                                 ---------------- --------------- --------------- ---------------
   NET INCOME                                              255.2           213.5           919.0           825.6
   Preferred stock dividends                                 8.3             -              17.7             -
                                                 ---------------- --------------- --------------- ---------------
   NET INCOME AVAILABLE TO COMMON STOCKHOLDERS          $  246.9        $  213.5        $  901.3        $  825.6
   Less:
   Net realized/unrealized capital gains
        (losses), as adjusted                              (15.9)           15.9           (20.6)          (62.3)
   Other after-tax adjustments                              44.9            (2.1)           59.5           123.1
                                                 ---------------- --------------- --------------- ---------------
   OPERATING EARNINGS                                   $  217.9        $  199.7        $  862.4        $  764.8
                                                 ================ =============== =============== ===============

</TABLE>

<TABLE>
<CAPTION>
                        SELECTED BALANCE SHEET STATISTICS

                                                                            PERIOD ENDED
                                                     ------------------------------------------------------------
                                                          12/31/05              12/31/04            12/31/03
                                                     -------------------- --------------------- -----------------
  <S>                                                     <C>                   <C>               <C>
  Total assets (in billions)                              $   127.0             $   113.8         $   107.8
  Total common equity (in millions)                       $ 7,265.2             $ 7,544.3         $ 7,399.6
  Total common equity excluding accumulated other
       comprehensive income (in millions)                 $ 6,270.4             $ 6,231.0         $ 6,228.3
  End of period common shares outstanding (in
       millions)                                              280.6                 300.6             320.7
  Book value per common share                             $    25.89            $    25.10        $    23.07
  Book value per common share excluding
      accumulated other comprehensive income              $    22.35            $    20.73        $    19.42

</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
                                                                 12/31/05       12/31/04       12/31/05      12/31/04
                                                             -------------- -------------- ------------- -------------
<S>                                                                <C>            <C>           <C>           <C>
DILUTED EARNINGS PER COMMONG SHARE:
Operating Earnings                                                     0.77           0.66          2.97          2.43
Net realized/unrealized capital gains (losses)                        (0.06)          0.05         (0.06)        (0.20)
Other after-tax adjustments                                            0.16          (0.01)         0.20          0.39
                                                             -------------- -------------- ------------- -------------
Net income available to common stockholders                            0.87           0.70          3.11          2.62
                                                             ============== ============== ============= =============
BOOK VALUE PER COMMON SHARE EXCLUDING OTHER COMPREHENSIVE
     INCOME:
Book value per common share excluding other comprehensive
     income                                                           22.35          20.73         22.35         20.73
Net unrealized capital gains                                           3.66           4.67          3.66          4.67
Foreign currency translation                                          (0.08)         (0.28)        (0.08)        (0.28)
Minimum pension liability                                             (0.04)         (0.02)        (0.04)        (0.02)
                                                             -------------- -------------- ------------- -------------
Book value per common share including other comprehensive
     income                                                           25.89          25.10         25.89         25.10
                                                             ============== ============== ============= =============
OPERATING REVENUES:
USAMA                                                              1,195.4        1,010.5       4,099.2       3,741.9
IAMA                                                                 165.1          147.1         604.5         518.4
Life and Health                                                    1,123.3        1,063.5       4,387.5       4,181.3
Corporate and Other                                                  (13.0)          (5.4)        (59.1)        (23.0)
                                                             -------------- -------------- ------------- -------------
Total operating revenues                                           2,470.8        2,215.7       9,032.1       8,418.6
Add:  Net realized/unrealized capital gains (losses) and
     related fee adjustments                                         (25.6)           23.0        (22.2)       (114.9)
Less:  Operating revenues from discontinued real estate                -              1.0           2.2           2.5
     investments                                             -------------- -------------- ------------- -------------
Total GAAP revenues                                                2,445.2        2,237.7       9,007.7       8,301.2
                                                             ============== ============== ============= =============
OPERATING EARNINGS:
USAMA                                                                136.0          134.3         538.4         499.0
IAMA                                                                  22.7           11.5          71.0          40.3
Life and Health                                                       63.2           52.9         274.4         256.2
Mortgage Banking                                                       -              -             -           (10.3)
Corporate and Other                                                   (4.0)           1.0         (21.4)        (20.4)
                                                             -------------- -------------- ------------- -------------
Total operating earnings                                             217.9          199.7         862.4         764.8
Net realized/unrealized capital gain (losses)                        (15.9)          15.9         (20.6)        (62.3)
Other after-tax adjustments                                           44.9           (2.1)         59.5         123.1
Net income available to common stockholders                          246.9          213.5         901.3         825.6
                                                             ============== ============== ============= =============
NET REALIZED/UNREALIZED CAPITAL GAINS (LOSSES):
Net realized/unrealized capital losses, as adjusted                  (15.9)          15.9         (20.6)        (62.3)
Add:
Amortization of DPAC and sale inducement costs                         0.4           (4.2)          0.7          (6.2)
Capital gains distributed                                              2.0            3.1           5.8           4.4
Tax impacts                                                          (12.4)           8.2         (10.6)        (51.1)
Minority interest capital gains                                        0.3            -             2.5           0.3
Less related fee adjustments:
Unearned front-end fee income                                          0.3           (2.0)          1.1          (2.1)
Certain market value adjustments to fee revenues                      (7.8)          (0.3)        (12.1)         (8.0)
                                                             -------------- -------------- ------------- -------------
GAAP net realized/unrealized capital gains (losses)                  (18.1)          25.3         (11.2)       (104.8)
                                                             ============== ============== ============= =============
OTHER AFTER TAX ADJUSTMENTS:
IRS audit issues                                                      33.8            -            33.8           -
SOP 03-1 implementation                                                -              -             -            (5.7)
Discontinued operations - Mortgage Banking                             2.7           (1.8)         (5.0)        118.8
Discontinued operations - Argentina                                    -             (0.3)          -            10.0
Discontinued operations - BT                                           8.4            -             8.4           -
Gain on disposal of discontinued real estate investments               -              -            22.3           -
                                                             -------------- -------------- ------------- -------------
Total other after-tax adjustments                                     44.9           (2.1)         59.5         123.1
                                                             ============== ============== ============= =============

</TABLE>

                                       10
<PAGE>

--------

(1)  Segment  highlights that follow discuss a number of items benefiting fourth
     quarter 2005 operating earnings.
(2)  Use of non-GAAP  financial  measures,  as well as a reconciliation of these
     measures to U.S. GAAP, is included later in this release.
(3)  In third quarter 2005, Principal  International  increased ownership in its
     Malaysian joint venture. As a result of increased ownership,  joint venture
     assets under  management of $1.8 billion were included in segment AUM as of
     September 30, 2005.
(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, 2005



                                       11
<PAGE>
[{"type": "8-K", "sequence": "1", "filename": "final4q05er.txt", "description": "FORM 8-K", "secsgml_size_bytes": 38392}]
{"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": "06583677"}, "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 6, 2006
                        (Date of earliest event reported)

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

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

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

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

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

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

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

On  February  6,  2006,  Principal  Financial  Group,  Inc.  publicly  announced
information  regarding its results of operations and financial condition for the
quarter  ended  December  31,  2005.  The text of the  announcement  is included
herewith as Exhibit 99.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

99 Fourth Quarter 2005 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 7, 2006

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

       PRINCIPAL FINANCIAL GROUP, INC. REPORTS FOURTH QUARTER 2005 RESULTS

Des Moines, IA (February 6, 2006) - Principal  Financial Group, Inc. (NYSE: PFG)
today announced net income available to common stockholders for the three months
ended December 31, 2005, of $246.9 million,  or $0.87 per diluted share compared
to $213.5  million,  or $0.70 per  diluted  share  for the  three  months  ended
December 31, 2004. The company reported operating earnings of $217.9 million for
fourth  quarter 2005,  compared to $199.7  million for fourth  quarter  2004(1).
Operating  earnings per diluted  share (EPS) for fourth  quarter 2005 were $0.77
compared to $0.66 for the same  period in 2004.  Operating  revenues  for fourth
quarter 2005 were  $2,470.8  million  compared to $2,215.7  million for the same
period last year.(2)

"We  entered  2005 faced with a number of  familiar  challenges,"  said J. Barry
Griswell,  chairman and chief  executive  officer.  "A difficult  equity  market
environment,  continuously  evolving customer needs, and a very high performance
bar - a track  record set over our first  three years as a public  company  that
included a 10 percent  compounded annual growth rate for operating  earnings,  a
$70 billion increase in assets under management,  and an average  improvement of
more than 110 basis points per year in return on equity."

"Importantly,  we delivered another very strong result. In 2005, we achieved our
seventh consecutive year of record operating  earnings,  up 13 percent from 2004
to $862 million, reflecting record performance in all three operating segments,"
said  Griswell.   "Strong  earnings,   combined  with  strategic  use  of  share
repurchases,  drove EPS up 22 percent to a record $2.97, including record fourth
quarter  earnings  per share of $0.77,  a 17 percent  improvement.  We also grew
assets  under  management  by $28 billion in 2005,  and  improved  our return on
equity by 150 basis points,  reaching  13.8 percent as of year-end."

Additional highlights for the fourth quarter and full year 2005 include:

o    Record net  income  available  to common  stockholders  of $901.3  million,
     driving  net income per  diluted  share up 19 percent to a record  $3.11 in
     2005.
o    Record assets under management (AUM) of $195.2 billion,  up 17 percent from
     2004,  including  organic growth of 33 percent for Principal  International
     and 25 percent for Principal Global Investors' third party AUM.
o    Record full service  accumulation  account values of $77.3  billion,  up 12
     percent from a year ago, and record full service  accumulation  deposits of
     $15.4 billion in 2005, an increase of 15 percent.
o    Record sales for each of the company's  three key retirement and investment
     products in 2005,  including:  $3.4 billion for mutual funds;  $2.0 billion
     for  individual  annuities;  and $6.1  billion  for  organic  full  service
     accumulation,  including $1.6 billion in the fourth  quarter,  a 17 percent
     increase for both periods.

                                       3
"Our  ability  to again  deliver  sustainable,  profitable  growth,  even  under
difficult  conditions,  reflects our  discipline and strong focus on meeting the
changing  needs  of  our  customers,"  said  Griswell.  "Employers  continue  to
recognize  the  importance  of employee  benefits in  attracting  and  retaining
employees - but increasingly they're looking for more cost-effective options and
shifting  decision-making and financial  responsibilities to employees. In turn,
employees are  increasingly  seeking  education,  guidance,  and  "do-it-for-me"
solutions  as they take a more  active  interest  in  building  their  financial
security."

"In 2005,  we continued to invest in our  portfolio  of worksite  solutions:  we
enhanced  our array of  bundled  offerings  such as Total  Retirement  Suite SM,
helping employers reduce  administrative burden and costs; we expanded access to
personalized  investment advice for retirement plan  participants;  we developed
new  retirement  income  management  solutions for  retirees;  we added new cost
effective health and voluntary benefits offerings; and we significantly expanded
our educational  resources to help employers meet their  fiduciary  obligations,
and to help  employees  improve  their  health and  financial  well being," said
Griswell.

"Our  ongoing   investment  in  helping  customers  achieve  financial  security
continues to drive strong and improving retention across our businesses, as well
as tremendous  sales  success," said Griswell.  "Combined sales of our three key
retirement and investment products - full service accumulation, mutual funds and
individual annuities - reached a record $11.5 billion for the year, a 13 percent
increase.  We also  achieved a fourth  consecutive  year of record  sales in our
Specialty Benefits division, an increase of 23 percent."

"2005 was another  year of strong  execution,  a year in which we  continued  to
differentiate The Principal in the marketplace and to strengthen our competitive
position,"  said  Griswell.   "We  are  highly   optimistic   about  the  growth
opportunities across our businesses, and in 2006, we'll continue to leverage our
strengths and execute our  customer-focused  strategy to deliver long-term value
for shareholders."

                               SEGMENT HIGHLIGHTS

U.S. ASSET MANAGEMENT AND ACCUMULATION
Segment operating earnings for fourth quarter 2005 were $136.0 million, compared
to  $134.3  million  for the same  period  in 2004.  Full  service  accumulation
earnings  were a record $66.1 million in fourth  quarter 2005.  This compares to
$64.6 million in fourth quarter 2004,  which included a $6.2 million tax benefit
for a special  dividend  received.  The  increase in full  service  accumulation
earnings was  primarily  due to increased  fees  generated  from higher  account
values.  Full  service  accumulation  account  values  were $77.3  billion as of
December 31, 2005 compared to $68.9 billion as of December 31, 2004.

Operating  revenues for fourth quarter  increased 18 percent to $1,195.4 million
from $1,010.5 million for the same period in 2004, primarily due to higher sales
of single premium group annuities. The single premium product, typically used to
fund defined  benefit  terminations,  can generate  large premiums from very few
customers and therefore causes revenues to vary from period to period. Excluding

                                       4
this product,  segment revenues increased 6 percent due to increased fees in the
full service accumulation and Principal Global Investors' operations.

Assets  under  management  for the segment  were a record  $164.3  billion as of
December 31, 2005,  compared to $159.0  billion as of  September  30, 2005,  and
compared to $142.1 billion as of December 31, 2004.

INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION
Segment operating  earnings for fourth quarter 2005 were a record $22.7 million,
compared  to $11.5  million  for the  same  period a year  ago,  reflecting  tax
benefits of $13.0 million, including an $8.7 million tax benefit associated with
the  liquidation  of  defined  contribution   operations  in  Japan.   Partially
offsetting fourth quarter 2005 tax benefits was some  discretionary  expenditure
on marketing,  advertising  and sales  training  during the quarter,  as well as
costs associated with the Japan liquidation.

Operating  revenues for fourth quarter were $165.1  million,  compared to $147.1
million for the same period a year ago reflecting strong growth in Hong Kong and
India, and favorable currency translation in Chile, Mexico, and Brazil.

Assets  under  management  for the  segment  were a record  $15.4  billion as of
December  31, 2005,  compared to $14.7  billion as of  September  30, 2005,  and
compared to $10.2 billion as of December 31, 2004.(3)

LIFE AND HEALTH INSURANCE
Segment operating earnings for fourth quarter 2005 were $63.2 million,  compared
to $52.9 million for the same period in 2004,  primarily due to solid growth and
improved loss ratios in the Health and Specialty Benefits divisions.

Operating  revenues  increased  to a record  $1,123.3  million for the  quarter,
compared  to  $1,063.5  million  for the same  period in 2004.  Revenues  in the
Specialty  Benefits  division  increased 13 percent,  driven by strong sales and
steady  retention  in each of the  division's  product  lines.  Health  revenues
improved 8 percent,  primarily  reflecting an increase in group medical  covered
members and higher  premium per member.  Individual  Life  revenues  decreased 3
percent,  as  the  company  continued  its  shift  in  marketing  emphasis  from
traditional  premium-based  products to  fee-based  universal  life and variable
universal life products.  Unlike traditional  premium-based products,  universal
life and variable universal life deposits are not reported as GAAP revenue.

                                       5
CORPORATE AND OTHER
Operating  losses  for  fourth  quarter  2005 were  $4.0  million,  compared  to
operating  earnings  of $1.0  million  for the  same  period  in  2004.  Because
corporate  operations are varied,  many items  contribute to this variance.  The
primary  contributor  to the decline was the  declaration  of the fourth quarter
2005 preferred stock dividend. This $8.3 million cost reduced operating earnings
within the Corporate segment with no corresponding  activity in the year earlier
period.  Partially  offsetting this cost was reduced interest expense on federal
income tax matters.

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 our
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 that these adjusting items have occurred in the past and could recur
in the  future.  Management  also  uses  non-GAAP  measures  for  goal  setting,
determining  employee  and  senior  management  awards  and  compensation,   and
evaluating  performance  on a basis  comparable  to that used by  investors  and
securities analysts.

FORWARD LOOKING AND CAUTIONARY STATEMENTS
This press release may contain forward-looking  statements,  including,  without
limitation,  statements  as to sales  targets,  sales and earnings  trends,  and
management's  beliefs,  expectations,  goals and opinions.  These statements are
based  on  a  number  of  assumptions  concerning  future  conditions  that  may
ultimately  prove to be  inaccurate.  Future  events  and their  effects  on the
company may not be those  anticipated,  and actual results may differ materially
from the results  anticipated in these  forward-looking  statements.  The risks,
uncertainties  and  factors  that could  cause or  contribute  to such  material
differences  are discussed in the  company's  annual report on Form 10-K for the
year ended December 31, 2004, and in the company's quarterly report on Form 10-Q
for the quarter ended September 30, 2005, filed with the Securities and Exchange
Commission.   These  risks  and  uncertainties   include,   without  limitation:
competitive  factors;  volatility  of  financial  markets;  decrease in ratings;
interest  rate changes;  inability to attract and retain sales  representatives;
international  business risks; foreign currency exchange rate fluctuations;  and
investment portfolio risks.

SHARE REPURCHASES
In June 2005, following the Board's share repurchase authorization of up to 15.0
million  shares,  the  company  entered  into an  accelerated  stock  repurchase
agreement  with a third party  investment  bank for  approximately  13.7 million
shares of Principal  Financial Group,  Inc. common stock with an initial payment
of $542.3  million,  using cash  proceeds  from the  company's  June issuance of
perpetual  preferred  stock.  The  transaction  was  subject  to a market  price
adjustment  provision based on the volume weighted average market price over the
execution  period,  which was settled in cash for $84.0  million on November 16,
2005. In the fourth quarter 2005, the company did not repurchase any shares from
the Board's  November 2005 $250 million  authorization,  but  repurchased  $50.0
million of shares under that program through February 1, 2006.

STOCK OPTIONS
The Principal  expenses  employee  stock options and the employee stock purchase
plan,  resulting  in an  after-tax  expense of $5.1  million and $21.3  million,
respectively  for the three and twelve months ended December 31, 2005,  compared
to $5.6 million and $22.4 million,  respectively for the three and twelve months
ended December 31, 2004.

                                       6
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  during  a live
conference call. Parties interested in listening to the conference call live may
access  the  webcast  on  the   company's   Investor   Relations   (IR)  website
(www.principal.com/investor)  or by dialing  (800)  374-1609  (U.S.  callers) or
(706) 643-7701  (International  callers)  approximately  10 minutes prior to the
start of the call.  To access the call,  leader name is Tom Graf.  Listeners can
access  an audio  replay  of the call on the IR  website,  or by  calling  (800)
642-1687 (US callers) or (706) 645-9291 (International callers). The access code
for the replay is 3370203.  Replays will be available through February 14, 2006.
The  financial  supplement  is  currently  available  on our  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 $195.2
billion in assets under  management(5)  and serves some 15.6  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 (LOSSES)* IN MILLIONS
                                                     -------------------------------------------------------------
                                                           THREE MONTHS ENDED,             TWELVE MONTHS ENDED,
SEGMENT       12/31/05       12/31/04       12/31/05        12/31/05
---------------------------------------------------- --------------- -------------- -------------- ---------------
             U.S. ASSET MANAGEMENT AND ACCUMULATION          $136.0         $134.3         $538.4          $499.0
---------------------------------------------------- --------------- -------------- -------------- ---------------
    INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION            22.7           11.5           71.0            40.3
---------------------------------------------------- --------------- -------------- -------------- ---------------
                          LIFE AND HEALTH INSURANCE            63.2           52.9          274.4           256.2
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                   MORTGAGE BANKING              -              -              -            (10.3)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                CORPORATE AND OTHER            (4.0)           1.0          (21.4)          (20.4)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                 OPERATING EARNINGS           217.9          199.7          862.4           764.8
---------------------------------------------------- --------------- -------------- -------------- ---------------
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS (LOSSES), AS ADJUSTED           (15.9)          15.9          (20.6)          (62.3)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                        OTHER AFTER-TAX ADJUSTMENTS            44.9           (2.1)          59.5           123.1
---------------------------------------------------- --------------- -------------- -------------- ---------------
        NET INCOME AVAILABLE TO COMMON STOCKHOLDERS          $246.9         $213.5         $901.3          $825.6
PER DILUTED EARNINGS PER SHARE
                                                                   AVAILABLE TO COMMON STOCKHOLDERS

                                                          THREE MONTHS ENDED,           TWELVE MONTHS ENDED,
                                                         12/31/05       12/31/04       12/31/05        12/31/04
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                 OPERATING EARNINGS      $  0.77           $  0.66        $  2.97        $   2.43
---------------------------------------------------- --------------- -------------- -------------- ---------------
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS (LOSSES), AS ADJUSTED        (0.06)             0.05          (0.06)          (0.20)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                        OTHER AFTER-TAX ADJUSTMENTS         0.16             (0.01)          0.20            0.39
---------------------------------------------------- --------------- -------------- -------------- ---------------
        NET INCOME AVAILABLE TO COMMON STOCKHOLDERS      $  0.87           $  0.70        $  3.11        $   2.62
---------------------------------------------------- --------------- -------------- -------------- ---------------
 WEIGHTED-AVERAGE DILUTED COMMON SHARES OUTSTANDING       282.9             304.7          289.9           314.7
<*Operating earnings versus U.S. GAAP (GAAP) net income

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

                                       8
PRINCIPAL FINANCIAL GROUP, INC.
                              RESULTS OF OPERATIONS
                                  (IN MILLIONS)

                                                       THREE MONTHS ENDED              TWELVE MONTHS ENDED
                                                 ---------------- --------------- --------------- ---------------
                                                       12/31/05         12/31/04        12/31/05        12/31/04
                                                 ---------------- --------------- --------------- ---------------
Premiums and other considerations                    $1,148.6        $  973.2        $3,975.0        $3,710.0
   Fees and other revenues                                 437.4           411.6         1,683.2         1,472.0
   Net investment income                                   877.3           827.6         3,360.7         3,224.0
   Net realized/unrealized capital gains                   (18.1)           25.3           (11.2)         (104.8)
   (losses)                                      ---------------- --------------- --------------- ---------------
   TOTAL REVENUES                                        2,445.2         2,237.7         9,007.7         8,301.2
                                                 ---------------- --------------- --------------- ---------------
   Benefits, claims, and settlement expenses
                                                         1,502.8         1,314.3         5,282.9         4,959.5
   Dividends to policyholders                               74.0            77.0           293.0           296.7
   Operating expenses                                      593.0           572.0         2,307.5         2,165.9
                                                 ---------------- --------------- --------------- ---------------
   TOTAL EXPENSES                                        2,169.8         1,963.3         7,883.4         7,422.1
                                                 ---------------- --------------- --------------- ---------------
   Income from continuing operations before
        income taxes                                       275.4           274.4         1,124.3           879.1
   Income taxes                                             31.3            59.4           232.4           178.2
                                                 ---------------- --------------- --------------- ---------------
   Income from continuing operations, net of
        related income taxes                               244.1           215.0           891.9           700.9
   Income (loss) from discontinued operations,
        net of related taxes                                11.1           (1.5)            27.1           130.4
                                                 ---------------- --------------- --------------- ---------------
   Income before cumulative effect of
        accounting change                                  255.2           213.5           919.0           831.3
   Cumulative effect of accounting change, net
        of related income taxes                              -               -               -              (5.7)
                                                 ---------------- --------------- --------------- ---------------
   NET INCOME                                              255.2           213.5           919.0           825.6
   Preferred stock dividends                                 8.3             -              17.7             -
                                                 ---------------- --------------- --------------- ---------------
   NET INCOME AVAILABLE TO COMMON STOCKHOLDERS          $  246.9        $  213.5        $  901.3        $  825.6
   Less:
   Net realized/unrealized capital gains
        (losses), as adjusted                              (15.9)           15.9           (20.6)          (62.3)
   Other after-tax adjustments                              44.9            (2.1)           59.5           123.1
                                                 ---------------- --------------- --------------- ---------------
   OPERATING EARNINGS                                   $  217.9        $  199.7        $  862.4        $  764.8
                                                 ================ =============== =============== ===============
SELECTED BALANCE SHEET STATISTICS

                                                                            PERIOD ENDED
                                                     ------------------------------------------------------------
                                                          12/31/05              12/31/04            12/31/03
                                                     -------------------- --------------------- -----------------
Total assets (in billions)                              $   127.0             $   113.8         $   107.8
  Total common equity (in millions)                       $ 7,265.2             $ 7,544.3         $ 7,399.6
  Total common equity excluding accumulated other
       comprehensive income (in millions)                 $ 6,270.4             $ 6,231.0         $ 6,228.3
  End of period common shares outstanding (in
       millions)                                              280.6                 300.6             320.7
  Book value per common share                             $    25.89            $    25.10        $    23.07
  Book value per common share excluding
      accumulated other comprehensive income              $    22.35            $    20.73        $    19.42
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
                                                                 12/31/05       12/31/04       12/31/05      12/31/04
                                                             -------------- -------------- ------------- -------------
DILUTED EARNINGS PER COMMONG SHARE:
Operating Earnings                                                     0.77           0.66          2.97          2.43
Net realized/unrealized capital gains (losses)                        (0.06)          0.05         (0.06)        (0.20)
Other after-tax adjustments                                            0.16          (0.01)         0.20          0.39
                                                             -------------- -------------- ------------- -------------
Net income available to common stockholders                            0.87           0.70          3.11          2.62
                                                             ============== ============== ============= =============
BOOK VALUE PER COMMON SHARE EXCLUDING OTHER COMPREHENSIVE
     INCOME:
Book value per common share excluding other comprehensive
     income                                                           22.35          20.73         22.35         20.73
Net unrealized capital gains                                           3.66           4.67          3.66          4.67
Foreign currency translation                                          (0.08)         (0.28)        (0.08)        (0.28)
Minimum pension liability                                             (0.04)         (0.02)        (0.04)        (0.02)
                                                             -------------- -------------- ------------- -------------
Book value per common share including other comprehensive
     income                                                           25.89          25.10         25.89         25.10
                                                             ============== ============== ============= =============
OPERATING REVENUES:
USAMA                                                              1,195.4        1,010.5       4,099.2       3,741.9
IAMA                                                                 165.1          147.1         604.5         518.4
Life and Health                                                    1,123.3        1,063.5       4,387.5       4,181.3
Corporate and Other                                                  (13.0)          (5.4)        (59.1)        (23.0)
                                                             -------------- -------------- ------------- -------------
Total operating revenues                                           2,470.8        2,215.7       9,032.1       8,418.6
Add:  Net realized/unrealized capital gains (losses) and
     related fee adjustments                                         (25.6)           23.0        (22.2)       (114.9)
Less:  Operating revenues from discontinued real estate                -              1.0           2.2           2.5
     investments                                             -------------- -------------- ------------- -------------
Total GAAP revenues                                                2,445.2        2,237.7       9,007.7       8,301.2
                                                             ============== ============== ============= =============
OPERATING EARNINGS:
USAMA                                                                136.0          134.3         538.4         499.0
IAMA                                                                  22.7           11.5          71.0          40.3
Life and Health                                                       63.2           52.9         274.4         256.2
Mortgage Banking                                                       -              -             -           (10.3)
Corporate and Other                                                   (4.0)           1.0         (21.4)        (20.4)
                                                             -------------- -------------- ------------- -------------
Total operating earnings                                             217.9          199.7         862.4         764.8
Net realized/unrealized capital gain (losses)                        (15.9)          15.9         (20.6)        (62.3)
Other after-tax adjustments                                           44.9           (2.1)         59.5         123.1
Net income available to common stockholders                          246.9          213.5         901.3         825.6
                                                             ============== ============== ============= =============
NET REALIZED/UNREALIZED CAPITAL GAINS (LOSSES):
Net realized/unrealized capital losses, as adjusted                  (15.9)          15.9         (20.6)        (62.3)
Add:
Amortization of DPAC and sale inducement costs                         0.4           (4.2)          0.7          (6.2)
Capital gains distributed                                              2.0            3.1           5.8           4.4
Tax impacts                                                          (12.4)           8.2         (10.6)        (51.1)
Minority interest capital gains                                        0.3            -             2.5           0.3
Less related fee adjustments:
Unearned front-end fee income                                          0.3           (2.0)          1.1          (2.1)
Certain market value adjustments to fee revenues                      (7.8)          (0.3)        (12.1)         (8.0)
                                                             -------------- -------------- ------------- -------------
GAAP net realized/unrealized capital gains (losses)                  (18.1)          25.3         (11.2)       (104.8)
                                                             ============== ============== ============= =============
OTHER AFTER TAX ADJUSTMENTS:
IRS audit issues                                                      33.8            -            33.8           -
SOP 03-1 implementation                                                -              -             -            (5.7)
Discontinued operations - Mortgage Banking                             2.7           (1.8)         (5.0)        118.8
Discontinued operations - Argentina                                    -             (0.3)          -            10.0
Discontinued operations - BT                                           8.4            -             8.4           -
Gain on disposal of discontinued real estate investments               -              -            22.3           -
                                                             -------------- -------------- ------------- -------------
Total other after-tax adjustments                                     44.9           (2.1)         59.5         123.1
                                                             ============== ============== ============= =============
10
--------

(1)  Segment  highlights that follow discuss a number of items benefiting fourth
     quarter 2005 operating earnings.
(2)  Use of non-GAAP  financial  measures,  as well as a reconciliation of these
     measures to U.S. GAAP, is included later in this release.
(3)  In third quarter 2005, Principal  International  increased ownership in its
     Malaysian joint venture. As a result of increased ownership,  joint venture
     assets under  management of $1.8 billion were included in segment AUM as of
     September 30, 2005.
(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, 2005

                                       11