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 7, 2005
                        (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  7,  2005,  Principal  Financial  Group,  Inc.  publicly  announced
information  regarding its results of operations and financial condition for the
quarter  ended  December  31,  2004.  The text of the  announcement  is included
herewith as Exhibit 99.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

99    Fourth Quarter 2004 Earnings Release




                                    SIGNATURE

         Pursuant to the  requirements  of the  Securities  and  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 8, 2005

                                       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 2004 RESULTS

Des Moines, IA (February 7, 2005) -- Principal Financial Group, Inc. (NYSE: PFG)
today  announced  quarterly  net income for the three months ended  December 31,
2004, of $213.5  million,  or $0.70 per diluted share  compared to net income of
$203.9  million,  or $0.63 per diluted share for the three months ended December
31, 2003. The company reported  operating  earnings of $199.7 million for fourth
quarter 2004, up 9 percent  compared to $183.1  million for fourth quarter 2003.
Operating  earnings per diluted share (EPS) for fourth quarter 2004 increased 16
percent  to $0.66  compared  to $0.57  for the same  period  in 2003.  Operating
revenues for fourth quarter 2004 were $2,215.7 million, up 3 percent compared to
the same period last year.1
         "The fourth quarter was a very strong finish for The Principal, capping
our  sixth  consecutive  year of  record  operating  earnings,"  said  J.  Barry
Griswell,  chairman,  president  and  chief  executive  officer.  "Each  of  our
operating  segments  achieved  record results for the year,  contributing  to 19
percent EPS growth."
         "We're extremely  pleased with our longer-term  track record, as well,"
said Griswell.  "Since our IPO, we've  achieved a three-year  compounded  annual
growth rate of 10 percent for  earnings  and 15 percent for  earnings per share.
We've also  improved  ROE2 from 8.9 percent at year-end  2001 to 12.3 percent at
year-end 2004."
     Additional highlights for the fourth quarter and full year 2004 include:

o    Record net income of $825.6 million and record net income per diluted share
     of $2.62 in 2004.
o    Record  operating  earnings  of $764.8  million  and record EPS of $2.43 in
     2004.
o    A seventh  consecutive  quarter of record  operating  earnings for the U.S.
     Asset  Management and  Accumulation  segment,  at $134.3 million for fourth
     quarter  2004,   including   record   earnings  for  Pension  Full  Service
     Accumulation.
o    Record assets under management of $168.7 billion, up 16 percent from 2003.
o    Record full service  accumulation  account values of $68.9  billion,  up 23
     percent from a year ago, and record full service  accumulation  deposits of
     $13.3 billion.
o    Strong sales of the company's key  retirement  and  investment  products in
     2004,  including:  a record $3.0  billion for mutual  funds;  a record $2.0
     billion for individual annuities; and $5.2 billion for organic full service
     accumulation, including $1.4 billion in the fourth quarter.

         "During  2004,  we  remained  tightly  focused  on our  fundamentals  -
delivering  innovative  retirement and employee benefits  solutions,  responsive
service,  and  exceptional  convenience,  choice and value," said Griswell.  "We
launched Total  Retirement  Suite and our combined High  Deductible  Health Plan
with Health Savings Account, both high quality, cost effective benefit solutions
that respond to evolving  employer needs and  preferences.  We also expanded our

                                       3
<PAGE>

array of retirement income management solutions,  as well as our role as trusted
advisor,  adding a wide array of education,  tools, and personalized guidance to
help  employees  assess their needs,  evaluate  their  options,  and develop and
execute a tailored financial plan."
         "Importantly,  our  ongoing  investment  in helping  customers  achieve
financial security and success continues to drive strong and improving retention
across our businesses,  as well as tremendous sales success," said Griswell. "In
our  largest  business,   pension  full  service  accumulation,   employer-level
retention  reached an all-time high in 2004, and our participant level retention
was double the industry  average.  In addition,  combined sales of our three key
retirement and investment products - pension full service  accumulation,  mutual
funds and individual  annuities - reached record levels,  surpassing $10 billion
for the year.
         "Strong  contributions from existing  retirement plan investors,  along
with our retention and sales success,  has in turn driven  significant growth in
assets  under  management  (AUM) and  account  values,"  said  Griswell.  "We've
achieved a three-year  compounded annual growth rate of 17.5 percent for AUM and
nearly 15 percent for full service accumulation account values, further evidence
of the increasing  strength of our  businesses.  Looking ahead, we remain highly
optimistic about the growth opportunities across our businesses.  We'll continue
to leverage our strengths and execute our  customer-focused  strategy to deliver
sustainable, profitable growth and to create long-term value for shareholders."

     Results for the twelve months ended December 31, 2004:

o    Net income  increased  to a record  $825.6  million,  or $2.62 per  diluted
     share,  compared  to net  income of $746.3  million,  or $2.28 per  diluted
     share, during the same period a year ago.
o    Operating  earnings  increased  15  percent  to a  record  $764.8  million,
     compared to $667.7 million in the year earlier period.  Operating  earnings
     per share increased 19 percent to a record $2.43 per diluted share compared
     to $2.04 per diluted share in the year earlier period.
o    Operating  revenues  increased 4 percent to $8,418.6  million from $8,063.0
     million during the same period a year ago.

                               SEGMENT HIGHLIGHTS

U.S. ASSET MANAGEMENT AND ACCUMULATION
         Segment operating earnings for fourth quarter 2004 increased 18 percent
to a record $134.3  million,  compared to $114.1  million for the same period in
2003, primarily reflecting strong results from pension full service accumulation
and Principal Global  Investors.  Full service  accumulation  delivered a record
$64.6 million of earnings,  a 20 percent  increase  compared to $53.9 million in
the prior year  quarter.  The  increase in full service  accumulation  operating
earnings  primarily  reflects growth in mean account values, but also includes a
$6.2  million  income tax  benefit  for a special  dividend  received  in fourth
quarter  2004.  Principal  Global  Investors'  earnings  more than  doubled,  an
increase of $9.3 million,  due to increased  earnings from the recently acquired
Post  Advisory  Group  and  from  growth  of  existing  commercial  real  estate
operations.
         Operating  revenues  for  the  fourth  quarter  were  $1,010.5  million
compared to $1,015.7 million for the same period in 2003.  Increased fees within
the full service  accumulation  operations  due to growth in account values were

                                       4
<PAGE>

offset by lower sales of single  premium  group  annuities.  The single  premium
product,  which is typically  used to fund  defined  benefit  terminations,  can
generate  large  premiums from a few customers and therefore  tends to vary from
period to period.  Excluding this product,  revenues for the segment increased 4
percent.
         Segment  assets under  management  continued  to  increase,  reaching a
record  $143.8  billion as of December 31,  2004,  an increase of 9 percent from
$132.1  billion as of  September  30,  2004,  and an increase of 19 percent from
$120.8  billion as of December  31,  2003.  Excluding  the fourth  quarter  2004
acquisition of ABN AMRO Trust Services,  the increase in assets under management
would have been 6 percent and 16 percent respectively, compared to September 30,
2004 and December 31, 2003.

INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION
         Segment operating  earnings for fourth quarter 2004 were $11.5 million,
compared to $8.2 million for the same period in 2003, an increase of 40 percent,
primarily the result of increased earnings in the Chilean operations compared to
the year earlier period.
         Operating revenues were $147.1 million for fourth quarter 2004 compared
to $120.5 million for the same period last year. The increase primarily reflects
higher  revenues  in the  Chilean  operations  due  to  inflation  and  stronger
currency.
         Assets  under  management  for the  segment  were  $10.2  billion as of
December  31,  2004,  an increase of 12 percent  compared to $9.1  billion as of
September 30, 2004, and an increase of 36 percent compared to $7.5 billion as of
December 31, 2003.

LIFE AND HEALTH INSURANCE
         Operating  earnings for fourth quarter 2004 were $52.9 million compared
to $66.4  million  for the same  period in 2003.  The  decline  for the  segment
primarily  reflects the fourth  quarter 2003  conversion to new deferred  policy
acquisition  cost and policy  valuation models on some of the company's life and
disability products. The conversion lowered amortization expense, which resulted
in a $16.7  million  increase in  operating  earnings  for the segment in fourth
quarter 2003, with no corresponding activity in fourth quarter 2004. The decline
also  reflects  lower  earnings in the health  division,  $9.2 million in fourth
quarter  2004,  compared to $20.6  million in the year ago  quarter,  reflecting
seasonality  and  unfavorable  claims  experience.   These  declines  were  only
partially  offset  by  improved  results  in the  Specialty  Benefits  division.
Specialty  Benefits  earnings improved by $9.5 million in fourth quarter 2004 to
$18.2  million,  reflecting  growth  overall  as well as very  favorable  claims
experience - experience that is not expected to continue in future quarters.
             Operating revenues increased 6 percent to a record $1,063.5 million
for the quarter,  compared to $1,004.5 million for the same period in 2003, with
improvement in all three  divisions:  increases in Individual Life revenues were
primarily driven by higher fees from Universal Life and Variable  Universal Life
products;   increases  in  Health  revenues  primarily  reflect  the  JF  Molloy
acquisition;  and increases in Specialty Benefits revenues were driven by strong

                                       5
<PAGE>

growth in each of the  division's  four  business  lines - group  dental/vision,
group life, group disability and individual disability insurance.

MORTGAGE BANKING
         The operating  earnings of the segment,  prior to the July 1, 2004 sale
of the mortgage banking operations, reflect only the corporate overhead expenses
allocated to the segment.  This is pursuant to Statement of Financial Accounting
Standard No. 144, ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS
("SFAS 144"),  whereby all revenues and expenses  (excluding  corporate overhead
allocated to the discontinued segment) are reported as discontinued  operations.
Based on this  treatment,  there were no  operating  earnings for the segment in
fourth quarter 2004,  compared to an operating loss of $4.7 million in the prior
year quarter.

CORPORATE AND OTHER
         Operating earnings for fourth quarter 2004 were $1.0 million,  compared
to  operating  losses of $0.9  million for the same period in 2003.  Because the
corporate  operations are varied,  many items  contributed to the variance.  The
largest  contributors  to the  increase  were  reduced  borrowing  costs  in the
corporate segment, and income on proceeds from the sale of Principal Residential
Mortgage, Inc.


FORWARD LOOKING AND CAUTIONARY STATEMENTS

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


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

                                       6
<PAGE>

SHARE REPURCHASES

In May 2004,  concurrent  with our  announcement  to sell the  mortgage  banking
operations,  the  Board  authorized  a share  repurchase  program  of up to $700
million.  During the quarter,  the company  repurchased  7.2 million  shares for
$266.5 million,  an average price per share of $37.17.  As of December 31, 2004,
under this program the company had  repurchased  17.5 million  shares for $625.0
million,  an  average  price of $35.65  per  share.  Under all  board-authorized
programs,  in 2004 the company  repurchased  a total of 21.7 million  shares for
$772.0 million, an average price of $35.56 per share.


STOCK OPTIONS

The Principal  expenses  employee  stock options and the employee stock purchase
plan,  resulting  in an  after-tax  expense of $5.6  million and $22.4  million,
respectively  for the three and twelve months ended December 31, 2004,  compared
to $3.7 million and $14.3 million,  respectively for the three and twelve months
ended December 31, 2003.

EARNINGS CONFERENCE CALL

At 9:00 A.M. (CST) tomorrow,  Chairman,  President and CEO J. Barry Griswell and
Executive  Vice  President  and CFO Mike Gersie will lead a discussion  during a
live  conference  call.  Parties  interested in listening to the conference call
live may access the webcast on the Principal  Financial Group Investor Relations
(IR) website (www.principal.com/investor) or by dialing (800) 374-1609 (U.S. and
Canadian  callers) or (706) 643-7701  (International  callers)  approximately 10
minutes prior to the start of the call.  To access the call,  leader name is Tom
Graf.  Listeners can access an audio replay of the call on the IR website, or by
calling  (800)  642-1687   (U.S.   and  Canadian   callers)  or  (706)  645-9291
(International callers). The access code for the replay is 3002676. Replays will
be available  through  February 15, 2005. 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))3 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 $168.7
billion in assets  under  management4  and serves  some 14.9  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
<PAGE>


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

                                                             OPERATING EARNINGS* (LOSS) IN MILLIONS
                                                              THREE MONTHS ENDED,          YEAR ENDED,

                                           SEGMENT         12/31/04       12/31/03       12/31/04        12/31/03
---------------------------------------------------- --------------- -------------- -------------- ---------------
<S>                                                          <C>            <C>            <C>             <C>
             U.S. ASSET MANAGEMENT AND ACCUMULATION          $134.3         $114.1         $499.0          $422.6
---------------------------------------------------- --------------- -------------- -------------- ---------------

    INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION            11.5            8.2           40.3            34.5
---------------------------------------------------- --------------- -------------- -------------- ---------------
                          LIFE AND HEALTH INSURANCE            52.9           66.4          256.2           241.2
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                   MORTGAGE BANKING             -             (4.7)         (10.3)          (18.1)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                CORPORATE AND OTHER             1.0          (0.9)          (20.4)          (12.5)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                 OPERATING EARNINGS           199.7          183.1          764.8           667.7
---------------------------------------------------- --------------- -------------- -------------- ---------------
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS (LOSSES), AS ADJUSTED            15.9           15.9          (62.3)          (49.3)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                        OTHER AFTER-TAX ADJUSTMENTS            (2.1)           4.9          123.1           127.9
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                         NET INCOME          $213.5         $203.9         $825.6          $746.3
------------------------------------------------------------------------------------------------------------------

</TABLE>

<TABLE>
<CAPTION>

                                                                         PER DILUTED SHARE

                                                          THREE MONTHS ENDED,                YEAR ENDED,
                                                     ------------------------------ ------------------------------
                                                        12/31/04       12/31/03       12/31/04        12/31/03
---------------------------------------------------- --------------- -------------- -------------- ---------------
<S>                                                      <C>              <C>              <C>            <C>
                                 OPERATING EARNINGS      $ 0.66           $  0.57          $2.43          $2.04
---------------------------------------------------- --------------- -------------- -------------- ---------------
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS (LOSSES), AS ADJUSTED        0.05              0.05          (0.20)         (0.15)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                        OTHER AFTER-TAX ADJUSTMENTS       (0.01)             0.01           0.39           0.39
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                         NET INCOME      $ 0.70           $  0.63          $2.62          $2.28
---------------------------------------------------- --------------- -------------- -------------- ---------------
        WEIGHTED-AVERAGE DILUTED SHARES OUTSTANDING      304.7             323.3          314.7          326.8
---------------------------------------------------- --------------- -------------- -------------- ---------------

</TABLE>

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

                                       8
<PAGE>

<TABLE>
<CAPTION>
                         PRINCIPAL FINANCIAL GROUP, INC.
                              RESULTS OF OPERATIONS
                                  (IN MILLIONS)
-----------------------------------------------------------------------------------------------------------------
                                                       THREE MONTHS ENDED                   YEAR ENDED
                                                 ---------------- --------------- --------------- ---------------
                                                    12/31/04         12/31/03        12/31/04        12/31/03
                                                 ---------------- --------------- --------------- ---------------
   <S>                                             <C>               <C>             <C>             <C>
   Premiums and other considerations               $       973.2     $     982.5     $   3,710.0     $   3,630.7
   Fees and other revenues                                 411.6           353.2         1,472.0         1,185.8
   Net investment income                                   828.6           810.2         3,226.5         3,233.4
   Net realized/unrealized capital                          25.3            27.4         (104.8)          (63.2)
   gains/(losses)
                                                 ---------------- --------------- --------------- ---------------
   TOTAL REVENUES                                        2,238.7         2,173.3         8,303.7         7,986.7
                                                 ---------------- --------------- --------------- ---------------
   Benefits, claims, and settlement expenses             1,314.3         1,301.5         4,959.5         4,855.8
   Dividends to policyholders                               77.0            75.2           296.7           307.9
   Operating expenses                                      572.0           528.6         2,165.9         1,998.7
                                                 ---------------- --------------- --------------- ---------------
   TOTAL EXPENSES                                        1,963.3         1,905.3         7,422.1         7,162.4
                                                 ---------------- --------------- --------------- ---------------
   Income from continuing operations before
        income taxes                                       275.4           268.0           881.6           824.3
   Income taxes                                             59.8            40.1           179.1           177.0
                                                 ---------------- --------------- --------------- ---------------
   Income from continuing operations, net of
        related income taxes                               215.6           227.9           702.5           647.3

   Income (loss) from discontinued operations,
        net of related income taxes                         (2.1)          (24.0)          128.8           102.4
                                                 ---------------- --------------- --------------- ---------------
   Income before cumulative effect of
        accounting changes                                 213.5           203.9           831.3           749.7
   Cumulative effect of accounting changes,
        net of related income taxes                          -               -              (5.7)           (3.4)
                                                 ---------------- --------------- --------------- ---------------
   NET INCOME                                      $       213.5     $     203.9     $     825.6     $     746.3

   Less:
   Net realized/unrealized capital gains
        (losses), as adjusted                               15.9            15.9           (62.3)          (49.3)
   Other after-tax adjustments                              (2.1)            4.9           123.1           127.9
                                                 ---------------- --------------- --------------- ---------------
   OPERATING EARNINGS                             $        199.7     $     183.1     $     764.8     $     667.7
                                                 ================ =============== =============== ===============
</TABLE>

<TABLE>
<CAPTION>
                        SELECTED BALANCE SHEET STATISTICS

                                                                            PERIOD ENDED
                                                     ------------------------------------------------------------
                                                           12/31/04             12/31/03            12/31/02
                                                     --------------------- -------------------- -----------------
  <S>                                                           <C>             <C>               <C>
  Total assets (in billions)                                    $   113.8       $   107.8         $    89.9
  Total equity (in millions)                                    $ 7,544.3       $ 7,399.6         $ 6,657.2
  Total equity excluding accumulated other
       comprehensive income (in millions)                       $ 6,231.0       $ 6,228.3         $ 6,021.4
  End of period shares outstanding (in millions)                    300.6           320.7             334.4
  Book value per share                                          $    25.10      $    23.07        $    19.91
  Book value per share excluding accumulated other
      comprehensive income                                      $    20.73      $    19.42        $    18.01

</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               YEAR ENDED
                                                             ----------------------------- ---------------------------
                                                                12/31/04       12/31/03       12/31/04      12/31/03
                                                             -------------- -------------- ------------- -------------
<S>                                                                   <C>            <C>           <C>           <C>
DILUTED EARNINGS PER SHARE:
Operating Earnings                                                    0.66           0.57          2.43          2.04
Net realized/unrealized capital gains/(losses)                        0.05           0.05         (0.20)        (0.15)
Other after-tax adjustments                                          (0.01)          0.01          0.39          0.39
                                                             -------------- -------------- ------------- -------------
Net income                                                            0.70           0.63          2.62          2.28
                                                             ============== ============== ============= =============

BOOK VALUE EXCLUDING OTHER COMPREHENSIVE INCOME:
Book value excluding other comprehensive income                      20.73          19.42         20.73         19.42
Net unrealized capital gains/(losses)                                 4.67           4.03          4.67          4.03
Foreign currency translation                                         (0.28)         (0.37)        (0.28)        (0.37)
Minimum pension liability                                            (0.02)         (0.01)        (0.02)        (0.01)
                                                             -------------- -------------- ------------- -------------
Book value including other comprehensive income                      25.10          23.07         25.10         23.07
                                                             ============== ============== ============= =============
OPERATING REVENUES:
USAMA                                                             1,010.5        1,015.7       3,741.9       3,622.4
IAMA                                                                147.1          120.5         518.4         399.5
Life and Health                                                   1,063.5        1,004.5       4,181.3       4,014.3
Mortgage Banking                                                      -              -             -             -
Corporate and Other                                                  (5.4)           6.9        (23.0)          26.8
                                                             -------------- -------------- ------------- -------------
Total operating revenues                                          2,215.7        2,147.6       8,418.6       8,063.0
Net realized/unrealized capital gains (losses) and
     related fee adjustments                                         23.0           25.7       (114.9)         (76.3)
                                                             -------------- -------------- ------------- -------------
Total GAAP revenues                                               2,238.7        2,173.3       8,303.7       7,986.7
                                                             ============== ============== ============= =============
OPERATING EARNINGS:
USAMA                                                               134.3          114.1         499.0         422.6
IAMA                                                                 11.5            8.2          40.3          34.5
Life and Health                                                      52.9           66.4         256.2         241.2
Mortgage Banking                                                      -             (4.7)        (10.3)        (18.1)
Corporate and Other                                                   1.0           (0.9)        (20.4)        (12.5)
                                                             -------------- -------------- ------------- -------------
Total operating earnings                                            199.7          183.1         764.8         667.7
Net realized/unrealized capital gains (losses)                       15.9           15.9         (62.3)        (49.3)
Other after-tax adjustments                                          (2.1)           4.9         123.1         127.9
                                                             -------------- -------------- ------------- -------------
Net income                                                          213.5          203.9         825.6         746.3
                                                             ============== ============== ============= =============
NET REALIZED/UNREALIZED CAPITAL GAINS (LOSSES):
Total net realized/unrealized capital gains (losses)                 15.9           15.9         (62.3)        (49.3)
Add:
Amortization of DPAC and sale inducement costs                       (4.2)          (2.1)         (6.2)         (5.1)
Capital gains distributed                                             3.1            1.3           4.4           3.3
Tax impacts                                                           8.2           10.1         (51.1)        (25.3)
Minority interest capital gains                                       -              0.5           0.3           0.1
Less related fee adjustments:
Unearned front-end fee income                                        (2.0)          (0.5)         (2.1)          4.6
Certain market value adjustments to fee revenues                     (0.3)          (1.2)         (8.0)        (17.7)
                                                             -------------- -------------- ------------- -------------
GAAP net realized/unrealized capital gains (losses)                   25.3          27.4        (104.8)        (63.2)
                                                             ============== ============== ============= =============
OTHER AFTER TAX ADJUSTMENTS:
IRS audit issue                                                       -             28.9           -            28.9
FIN 46 implementation                                                 -              -             -            (3.4)
SOP 03-1 implementation                                               -              -            (5.7)          -
Discontinued operations                                              (2.1)         (24.0)        128.8         102.4
                                                             -------------- -------------- ------------- -------------
Total other after-tax adjustments                                    (2.1)           4.9         123.1         127.9
                                                             ============== ============== ============= =============
</TABLE>

--------
1    Use of non-GAAP financial measures discussed on page 4 of this release
2    Operating return on average equity, excluding other comprehensive income
3    "The Principal  Financial Group" and "The Principal" are registered service
     marks of Principal  Financial  Services,  Inc.,  a member of the  Principal
     Financial Group.
4    As of December 31, 2004


                                       10
<PAGE>
[{"type": "8-K", "sequence": "1", "filename": "fourthqtrresults.txt", "description": "FOURTH QUARTER EARNINGS RELEASE", "secsgml_size_bytes": 39075}]
{"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": "05582309"}, "business-address": {"street1": "711 HIGH STREET", "city": "DES MOINES", "state": "IA", "zip": "50392", "phone": "5152475111"}}
SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                    FORM 8-K

                                 CURRENT REPORT

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

                        Date of Report: FEBRUARY 7, 2005
                        (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  7,  2005,  Principal  Financial  Group,  Inc.  publicly  announced
information  regarding its results of operations and financial condition for the
quarter  ended  December  31,  2004.  The text of the  announcement  is included
herewith as Exhibit 99.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

99    Fourth Quarter 2004 Earnings Release

                                    SIGNATURE

         Pursuant to the  requirements  of the  Securities  and  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 8, 2005

                                       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 2004 RESULTS

Des Moines, IA (February 7, 2005) -- Principal Financial Group, Inc. (NYSE: PFG)
today  announced  quarterly  net income for the three months ended  December 31,
2004, of $213.5  million,  or $0.70 per diluted share  compared to net income of
$203.9  million,  or $0.63 per diluted share for the three months ended December
31, 2003. The company reported  operating  earnings of $199.7 million for fourth
quarter 2004, up 9 percent  compared to $183.1  million for fourth quarter 2003.
Operating  earnings per diluted share (EPS) for fourth quarter 2004 increased 16
percent  to $0.66  compared  to $0.57  for the same  period  in 2003.  Operating
revenues for fourth quarter 2004 were $2,215.7 million, up 3 percent compared to
the same period last year.1
         "The fourth quarter was a very strong finish for The Principal, capping
our  sixth  consecutive  year of  record  operating  earnings,"  said  J.  Barry
Griswell,  chairman,  president  and  chief  executive  officer.  "Each  of  our
operating  segments  achieved  record results for the year,  contributing  to 19
percent EPS growth."
         "We're extremely  pleased with our longer-term  track record, as well,"
said Griswell.  "Since our IPO, we've  achieved a three-year  compounded  annual
growth rate of 10 percent for  earnings  and 15 percent for  earnings per share.
We've also  improved  ROE2 from 8.9 percent at year-end  2001 to 12.3 percent at
year-end 2004."
     Additional highlights for the fourth quarter and full year 2004 include:

o    Record net income of $825.6 million and record net income per diluted share
     of $2.62 in 2004.
o    Record  operating  earnings  of $764.8  million  and record EPS of $2.43 in
     2004.
o    A seventh  consecutive  quarter of record  operating  earnings for the U.S.
     Asset  Management and  Accumulation  segment,  at $134.3 million for fourth
     quarter  2004,   including   record   earnings  for  Pension  Full  Service
     Accumulation.
o    Record assets under management of $168.7 billion, up 16 percent from 2003.
o    Record full service  accumulation  account values of $68.9  billion,  up 23
     percent from a year ago, and record full service  accumulation  deposits of
     $13.3 billion.
o    Strong sales of the company's key  retirement  and  investment  products in
     2004,  including:  a record $3.0  billion for mutual  funds;  a record $2.0
     billion for individual annuities; and $5.2 billion for organic full service
     accumulation, including $1.4 billion in the fourth quarter.

         "During  2004,  we  remained  tightly  focused  on our  fundamentals  -
delivering  innovative  retirement and employee benefits  solutions,  responsive
service,  and  exceptional  convenience,  choice and value," said Griswell.  "We
launched Total  Retirement  Suite and our combined High  Deductible  Health Plan
with Health Savings Account, both high quality, cost effective benefit solutions
that respond to evolving  employer needs and  preferences.  We also expanded our

                                       3
array of retirement income management solutions,  as well as our role as trusted
advisor,  adding a wide array of education,  tools, and personalized guidance to
help  employees  assess their needs,  evaluate  their  options,  and develop and
execute a tailored financial plan."
         "Importantly,  our  ongoing  investment  in helping  customers  achieve
financial security and success continues to drive strong and improving retention
across our businesses,  as well as tremendous sales success," said Griswell. "In
our  largest  business,   pension  full  service  accumulation,   employer-level
retention  reached an all-time high in 2004, and our participant level retention
was double the industry  average.  In addition,  combined sales of our three key
retirement and investment products - pension full service  accumulation,  mutual
funds and individual  annuities - reached record levels,  surpassing $10 billion
for the year.
         "Strong  contributions from existing  retirement plan investors,  along
with our retention and sales success,  has in turn driven  significant growth in
assets  under  management  (AUM) and  account  values,"  said  Griswell.  "We've
achieved a three-year  compounded annual growth rate of 17.5 percent for AUM and
nearly 15 percent for full service accumulation account values, further evidence
of the increasing  strength of our  businesses.  Looking ahead, we remain highly
optimistic about the growth opportunities across our businesses.  We'll continue
to leverage our strengths and execute our  customer-focused  strategy to deliver
sustainable, profitable growth and to create long-term value for shareholders."

     Results for the twelve months ended December 31, 2004:

o    Net income  increased  to a record  $825.6  million,  or $2.62 per  diluted
     share,  compared  to net  income of $746.3  million,  or $2.28 per  diluted
     share, during the same period a year ago.
o    Operating  earnings  increased  15  percent  to a  record  $764.8  million,
     compared to $667.7 million in the year earlier period.  Operating  earnings
     per share increased 19 percent to a record $2.43 per diluted share compared
     to $2.04 per diluted share in the year earlier period.
o    Operating  revenues  increased 4 percent to $8,418.6  million from $8,063.0
     million during the same period a year ago.

                               SEGMENT HIGHLIGHTS

U.S. ASSET MANAGEMENT AND ACCUMULATION
         Segment operating earnings for fourth quarter 2004 increased 18 percent
to a record $134.3  million,  compared to $114.1  million for the same period in
2003, primarily reflecting strong results from pension full service accumulation
and Principal Global  Investors.  Full service  accumulation  delivered a record
$64.6 million of earnings,  a 20 percent  increase  compared to $53.9 million in
the prior year  quarter.  The  increase in full service  accumulation  operating
earnings  primarily  reflects growth in mean account values, but also includes a
$6.2  million  income tax  benefit  for a special  dividend  received  in fourth
quarter  2004.  Principal  Global  Investors'  earnings  more than  doubled,  an
increase of $9.3 million,  due to increased  earnings from the recently acquired
Post  Advisory  Group  and  from  growth  of  existing  commercial  real  estate
operations.
         Operating  revenues  for  the  fourth  quarter  were  $1,010.5  million
compared to $1,015.7 million for the same period in 2003.  Increased fees within
the full service  accumulation  operations  due to growth in account values were

                                       4
offset by lower sales of single  premium  group  annuities.  The single  premium
product,  which is typically  used to fund  defined  benefit  terminations,  can
generate  large  premiums from a few customers and therefore  tends to vary from
period to period.  Excluding this product,  revenues for the segment increased 4
percent.
         Segment  assets under  management  continued  to  increase,  reaching a
record  $143.8  billion as of December 31,  2004,  an increase of 9 percent from
$132.1  billion as of  September  30,  2004,  and an increase of 19 percent from
$120.8  billion as of December  31,  2003.  Excluding  the fourth  quarter  2004
acquisition of ABN AMRO Trust Services,  the increase in assets under management
would have been 6 percent and 16 percent respectively, compared to September 30,
2004 and December 31, 2003.

INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION
         Segment operating  earnings for fourth quarter 2004 were $11.5 million,
compared to $8.2 million for the same period in 2003, an increase of 40 percent,
primarily the result of increased earnings in the Chilean operations compared to
the year earlier period.
         Operating revenues were $147.1 million for fourth quarter 2004 compared
to $120.5 million for the same period last year. The increase primarily reflects
higher  revenues  in the  Chilean  operations  due  to  inflation  and  stronger
currency.
         Assets  under  management  for the  segment  were  $10.2  billion as of
December  31,  2004,  an increase of 12 percent  compared to $9.1  billion as of
September 30, 2004, and an increase of 36 percent compared to $7.5 billion as of
December 31, 2003.

LIFE AND HEALTH INSURANCE
         Operating  earnings for fourth quarter 2004 were $52.9 million compared
to $66.4  million  for the same  period in 2003.  The  decline  for the  segment
primarily  reflects the fourth  quarter 2003  conversion to new deferred  policy
acquisition  cost and policy  valuation models on some of the company's life and
disability products. The conversion lowered amortization expense, which resulted
in a $16.7  million  increase in  operating  earnings  for the segment in fourth
quarter 2003, with no corresponding activity in fourth quarter 2004. The decline
also  reflects  lower  earnings in the health  division,  $9.2 million in fourth
quarter  2004,  compared to $20.6  million in the year ago  quarter,  reflecting
seasonality  and  unfavorable  claims  experience.   These  declines  were  only
partially  offset  by  improved  results  in the  Specialty  Benefits  division.
Specialty  Benefits  earnings improved by $9.5 million in fourth quarter 2004 to
$18.2  million,  reflecting  growth  overall  as well as very  favorable  claims
experience - experience that is not expected to continue in future quarters.
             Operating revenues increased 6 percent to a record $1,063.5 million
for the quarter,  compared to $1,004.5 million for the same period in 2003, with
improvement in all three  divisions:  increases in Individual Life revenues were
primarily driven by higher fees from Universal Life and Variable  Universal Life
products;   increases  in  Health  revenues  primarily  reflect  the  JF  Molloy
acquisition;  and increases in Specialty Benefits revenues were driven by strong

                                       5
growth in each of the  division's  four  business  lines - group  dental/vision,
group life, group disability and individual disability insurance.

MORTGAGE BANKING
         The operating  earnings of the segment,  prior to the July 1, 2004 sale
of the mortgage banking operations, reflect only the corporate overhead expenses
allocated to the segment.  This is pursuant to Statement of Financial Accounting
Standard No. 144, ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS
("SFAS 144"),  whereby all revenues and expenses  (excluding  corporate overhead
allocated to the discontinued segment) are reported as discontinued  operations.
Based on this  treatment,  there were no  operating  earnings for the segment in
fourth quarter 2004,  compared to an operating loss of $4.7 million in the prior
year quarter.

CORPORATE AND OTHER
         Operating earnings for fourth quarter 2004 were $1.0 million,  compared
to  operating  losses of $0.9  million for the same period in 2003.  Because the
corporate  operations are varied,  many items  contributed to the variance.  The
largest  contributors  to the  increase  were  reduced  borrowing  costs  in the
corporate segment, and income on proceeds from the sale of Principal Residential
Mortgage, Inc.

FORWARD LOOKING AND CAUTIONARY STATEMENTS

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

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

                                       6
SHARE REPURCHASES

In May 2004,  concurrent  with our  announcement  to sell the  mortgage  banking
operations,  the  Board  authorized  a share  repurchase  program  of up to $700
million.  During the quarter,  the company  repurchased  7.2 million  shares for
$266.5 million,  an average price per share of $37.17.  As of December 31, 2004,
under this program the company had  repurchased  17.5 million  shares for $625.0
million,  an  average  price of $35.65  per  share.  Under all  board-authorized
programs,  in 2004 the company  repurchased  a total of 21.7 million  shares for
$772.0 million, an average price of $35.56 per share.

STOCK OPTIONS

The Principal  expenses  employee  stock options and the employee stock purchase
plan,  resulting  in an  after-tax  expense of $5.6  million and $22.4  million,
respectively  for the three and twelve months ended December 31, 2004,  compared
to $3.7 million and $14.3 million,  respectively for the three and twelve months
ended December 31, 2003.

EARNINGS CONFERENCE CALL

At 9:00 A.M. (CST) tomorrow,  Chairman,  President and CEO J. Barry Griswell and
Executive  Vice  President  and CFO Mike Gersie will lead a discussion  during a
live  conference  call.  Parties  interested in listening to the conference call
live may access the webcast on the Principal  Financial Group Investor Relations
(IR) website (www.principal.com/investor) or by dialing (800) 374-1609 (U.S. and
Canadian  callers) or (706) 643-7701  (International  callers)  approximately 10
minutes prior to the start of the call.  To access the call,  leader name is Tom
Graf.  Listeners can access an audio replay of the call on the IR website, or by
calling  (800)  642-1687   (U.S.   and  Canadian   callers)  or  (706)  645-9291
(International callers). The access code for the replay is 3002676. Replays will
be available  through  February 15, 2005. 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))3 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 $168.7
billion in assets  under  management4  and serves  some 14.9  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
SUMMARY OF SEGMENT AND PRINCIPAL FINANCIAL GROUP, INC. RESULTS

                                                             OPERATING EARNINGS* (LOSS) IN MILLIONS
                                                              THREE MONTHS ENDED,          YEAR ENDED,

                                           SEGMENT         12/31/04       12/31/03       12/31/04        12/31/03
---------------------------------------------------- --------------- -------------- -------------- ---------------
U.S. ASSET MANAGEMENT AND ACCUMULATION          $134.3         $114.1         $499.0          $422.6
---------------------------------------------------- --------------- -------------- -------------- ---------------

    INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION            11.5            8.2           40.3            34.5
---------------------------------------------------- --------------- -------------- -------------- ---------------
                          LIFE AND HEALTH INSURANCE            52.9           66.4          256.2           241.2
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                   MORTGAGE BANKING             -             (4.7)         (10.3)          (18.1)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                CORPORATE AND OTHER             1.0          (0.9)          (20.4)          (12.5)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                 OPERATING EARNINGS           199.7          183.1          764.8           667.7
---------------------------------------------------- --------------- -------------- -------------- ---------------
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS (LOSSES), AS ADJUSTED            15.9           15.9          (62.3)          (49.3)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                        OTHER AFTER-TAX ADJUSTMENTS            (2.1)           4.9          123.1           127.9
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                         NET INCOME          $213.5         $203.9         $825.6          $746.3
------------------------------------------------------------------------------------------------------------------
PER DILUTED SHARE

                                                          THREE MONTHS ENDED,                YEAR ENDED,
                                                     ------------------------------ ------------------------------
                                                        12/31/04       12/31/03       12/31/04        12/31/03
---------------------------------------------------- --------------- -------------- -------------- ---------------
OPERATING EARNINGS      $ 0.66           $  0.57          $2.43          $2.04
---------------------------------------------------- --------------- -------------- -------------- ---------------
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS (LOSSES), AS ADJUSTED        0.05              0.05          (0.20)         (0.15)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                        OTHER AFTER-TAX ADJUSTMENTS       (0.01)             0.01           0.39           0.39
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                         NET INCOME      $ 0.70           $  0.63          $2.62          $2.28
---------------------------------------------------- --------------- -------------- -------------- ---------------
        WEIGHTED-AVERAGE DILUTED SHARES OUTSTANDING      304.7             323.3          314.7          326.8
---------------------------------------------------- --------------- -------------- -------------- ---------------
*OPERATING EARNINGS VERSUS U.S. GAAP (GAAP) NET INCOME
Management   uses  operating   earnings,   which  excludes  the  effect  of  net
realized/unrealized  capital gains and losses, as adjusted,  and other after-tax
adjustments, for goal setting, determining employee compensation, and evaluating
performance on a basis comparable to that used by securities  analysts.  Segment
operating  earnings are  determined  by adjusting  U.S.  GAAP net income for net
realized/unrealized  capital gains and losses, as adjusted,  and other after-tax
adjustments we believe are not  indicative of overall  operating  trends.  Note:
after-tax  adjustments  have  occurred  in the past and  could  recur in  future
reporting  periods.   While  these  items  may  be  significant   components  in
understanding and assessing our consolidated financial  performance,  we believe
the presentation of segment operating earnings enhances the understanding of our
results of  operations  by  highlighting  earnings  attributable  to the normal,
ongoing operations of our businesses.

                                       8
PRINCIPAL FINANCIAL GROUP, INC.
                              RESULTS OF OPERATIONS
                                  (IN MILLIONS)
-----------------------------------------------------------------------------------------------------------------
                                                       THREE MONTHS ENDED                   YEAR ENDED
                                                 ---------------- --------------- --------------- ---------------
                                                    12/31/04         12/31/03        12/31/04        12/31/03
                                                 ---------------- --------------- --------------- ---------------
Premiums and other considerations               $       973.2     $     982.5     $   3,710.0     $   3,630.7
   Fees and other revenues                                 411.6           353.2         1,472.0         1,185.8
   Net investment income                                   828.6           810.2         3,226.5         3,233.4
   Net realized/unrealized capital                          25.3            27.4         (104.8)          (63.2)
   gains/(losses)
                                                 ---------------- --------------- --------------- ---------------
   TOTAL REVENUES                                        2,238.7         2,173.3         8,303.7         7,986.7
                                                 ---------------- --------------- --------------- ---------------
   Benefits, claims, and settlement expenses             1,314.3         1,301.5         4,959.5         4,855.8
   Dividends to policyholders                               77.0            75.2           296.7           307.9
   Operating expenses                                      572.0           528.6         2,165.9         1,998.7
                                                 ---------------- --------------- --------------- ---------------
   TOTAL EXPENSES                                        1,963.3         1,905.3         7,422.1         7,162.4
                                                 ---------------- --------------- --------------- ---------------
   Income from continuing operations before
        income taxes                                       275.4           268.0           881.6           824.3
   Income taxes                                             59.8            40.1           179.1           177.0
                                                 ---------------- --------------- --------------- ---------------
   Income from continuing operations, net of
        related income taxes                               215.6           227.9           702.5           647.3

   Income (loss) from discontinued operations,
        net of related income taxes                         (2.1)          (24.0)          128.8           102.4
                                                 ---------------- --------------- --------------- ---------------
   Income before cumulative effect of
        accounting changes                                 213.5           203.9           831.3           749.7
   Cumulative effect of accounting changes,
        net of related income taxes                          -               -              (5.7)           (3.4)
                                                 ---------------- --------------- --------------- ---------------
   NET INCOME                                      $       213.5     $     203.9     $     825.6     $     746.3

   Less:
   Net realized/unrealized capital gains
        (losses), as adjusted                               15.9            15.9           (62.3)          (49.3)
   Other after-tax adjustments                              (2.1)            4.9           123.1           127.9
                                                 ---------------- --------------- --------------- ---------------
   OPERATING EARNINGS                             $        199.7     $     183.1     $     764.8     $     667.7
                                                 ================ =============== =============== ===============
SELECTED BALANCE SHEET STATISTICS

                                                                            PERIOD ENDED
                                                     ------------------------------------------------------------
                                                           12/31/04             12/31/03            12/31/02
                                                     --------------------- -------------------- -----------------
Total assets (in billions)                                    $   113.8       $   107.8         $    89.9
  Total equity (in millions)                                    $ 7,544.3       $ 7,399.6         $ 6,657.2
  Total equity excluding accumulated other
       comprehensive income (in millions)                       $ 6,231.0       $ 6,228.3         $ 6,021.4
  End of period shares outstanding (in millions)                    300.6           320.7             334.4
  Book value per share                                          $    25.10      $    23.07        $    19.91
  Book value per share excluding accumulated other
      comprehensive income                                      $    20.73      $    19.42        $    18.01
9
PRINCIPAL FINANCIAL GROUP, INC.
           RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO U.S. GAAP
                       (IN MILLIONS, EXCEPT AS INDICATED)

                                                                  THREE MONTHS ENDED               YEAR ENDED
                                                             ----------------------------- ---------------------------
                                                                12/31/04       12/31/03       12/31/04      12/31/03
                                                             -------------- -------------- ------------- -------------
DILUTED EARNINGS PER SHARE:
Operating Earnings                                                    0.66           0.57          2.43          2.04
Net realized/unrealized capital gains/(losses)                        0.05           0.05         (0.20)        (0.15)
Other after-tax adjustments                                          (0.01)          0.01          0.39          0.39
                                                             -------------- -------------- ------------- -------------
Net income                                                            0.70           0.63          2.62          2.28
                                                             ============== ============== ============= =============

BOOK VALUE EXCLUDING OTHER COMPREHENSIVE INCOME:
Book value excluding other comprehensive income                      20.73          19.42         20.73         19.42
Net unrealized capital gains/(losses)                                 4.67           4.03          4.67          4.03
Foreign currency translation                                         (0.28)         (0.37)        (0.28)        (0.37)
Minimum pension liability                                            (0.02)         (0.01)        (0.02)        (0.01)
                                                             -------------- -------------- ------------- -------------
Book value including other comprehensive income                      25.10          23.07         25.10         23.07
                                                             ============== ============== ============= =============
OPERATING REVENUES:
USAMA                                                             1,010.5        1,015.7       3,741.9       3,622.4
IAMA                                                                147.1          120.5         518.4         399.5
Life and Health                                                   1,063.5        1,004.5       4,181.3       4,014.3
Mortgage Banking                                                      -              -             -             -
Corporate and Other                                                  (5.4)           6.9        (23.0)          26.8
                                                             -------------- -------------- ------------- -------------
Total operating revenues                                          2,215.7        2,147.6       8,418.6       8,063.0
Net realized/unrealized capital gains (losses) and
     related fee adjustments                                         23.0           25.7       (114.9)         (76.3)
                                                             -------------- -------------- ------------- -------------
Total GAAP revenues                                               2,238.7        2,173.3       8,303.7       7,986.7
                                                             ============== ============== ============= =============
OPERATING EARNINGS:
USAMA                                                               134.3          114.1         499.0         422.6
IAMA                                                                 11.5            8.2          40.3          34.5
Life and Health                                                      52.9           66.4         256.2         241.2
Mortgage Banking                                                      -             (4.7)        (10.3)        (18.1)
Corporate and Other                                                   1.0           (0.9)        (20.4)        (12.5)
                                                             -------------- -------------- ------------- -------------
Total operating earnings                                            199.7          183.1         764.8         667.7
Net realized/unrealized capital gains (losses)                       15.9           15.9         (62.3)        (49.3)
Other after-tax adjustments                                          (2.1)           4.9         123.1         127.9
                                                             -------------- -------------- ------------- -------------
Net income                                                          213.5          203.9         825.6         746.3
                                                             ============== ============== ============= =============
NET REALIZED/UNREALIZED CAPITAL GAINS (LOSSES):
Total net realized/unrealized capital gains (losses)                 15.9           15.9         (62.3)        (49.3)
Add:
Amortization of DPAC and sale inducement costs                       (4.2)          (2.1)         (6.2)         (5.1)
Capital gains distributed                                             3.1            1.3           4.4           3.3
Tax impacts                                                           8.2           10.1         (51.1)        (25.3)
Minority interest capital gains                                       -              0.5           0.3           0.1
Less related fee adjustments:
Unearned front-end fee income                                        (2.0)          (0.5)         (2.1)          4.6
Certain market value adjustments to fee revenues                     (0.3)          (1.2)         (8.0)        (17.7)
                                                             -------------- -------------- ------------- -------------
GAAP net realized/unrealized capital gains (losses)                   25.3          27.4        (104.8)        (63.2)
                                                             ============== ============== ============= =============
OTHER AFTER TAX ADJUSTMENTS:
IRS audit issue                                                       -             28.9           -            28.9
FIN 46 implementation                                                 -              -             -            (3.4)
SOP 03-1 implementation                                               -              -            (5.7)          -
Discontinued operations                                              (2.1)         (24.0)        128.8         102.4
                                                             -------------- -------------- ------------- -------------
Total other after-tax adjustments                                    (2.1)           4.9         123.1         127.9
                                                             ============== ============== ============= =============
--------
1    Use of non-GAAP financial measures discussed on page 4 of this release
2    Operating return on average equity, excluding other comprehensive income
3    "The Principal  Financial Group" and "The Principal" are registered service
     marks of Principal  Financial  Services,  Inc.,  a member of the  Principal
     Financial Group.
4    As of December 31, 2004

                                       10