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: OCTOBER 31, 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  October  31,  2005,  Principal  Financial  Group,  Inc.  publicly  announced
information  regarding its results of operations and financial condition for the
quarter  ended  September  30, 2005.  The text of the  announcement  is included
herewith as Exhibit 99.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

99 Third 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:    November 1, 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 THIRD QUARTER 2005 RESULTS

Des Moines, IA (October 31, 2005) - Principal  Financial Group, Inc. (NYSE: PFG)
today announced net income available to common stockholders for the three months
ended  September 30, 2005, of $210.0 million,  or $0.74 per diluted share.  This
compares to $298.8  million (which  included  gains of $94.1 million  associated
with  the  sale of  Principal  Residential  Mortgage,  Inc.  and  $10.1  million
associated with the sale of operations in Argentina), or $0.95 per diluted share
for the three months ended  September 30, 2004. The company  reported  operating
earnings of $214.3 million for third quarter 2005(1), compared to $205.2 million
for third  quarter  2004.  Operating  earnings per diluted share (EPS) for third
quarter 2005 were $0.75 compared to $0.66 for the same period in 2004. Operating
revenues  for third  quarter  2005 were  $2,221.9  million  compared to $2,111.8
million for the same period last year.(2)

"With our  initial  public  offering  in October  2001,  we set some  aggressive
long-term growth targets,  including 11 to 13 percent annual growth in operating
earnings  per  diluted  share,"  said J.  Barry  Griswell,  chairman  and  chief
executive  officer.  "Four years later,  we've  established  The Principal as an
organization that delivers, with results year-to-date  underscoring that point -
third quarter EPS is up 14 percent to 75 cents, and through nine months,  EPS is
$2.19, an increase of 23 percent compared to the year ago period."

"We  committed  to driving  growth by building on our U.S.  retirement  services
leadership;    by   leveraging   our   retirement   leadership   and   expertise
internationally;  and by  creating a  successful  global  asset  manager,"  said
Griswell.  "Again,  results  for the  quarter  and  year-to-date  emphasize  our
continued success."

o    Operating  earnings for the  company's  largest U.S.  retirement  business,
     pension  full  service  accumulation,  are up 10 percent from a year ago to
     $62.7 million and up 12 percent through nine months to $185.5 million.

o    Organic full service  accumulation  sales were a record $1.9 billion in the
     third  quarter,  driving the nine month total to nearly $4.5  billion,  and
     positioning  the company to achieve or exceed its full year  organic  sales
     target of $5.7 to $5.8 billion.

o    Full service  accumulation account values are up 25 percent from a year ago
     at $75.1  billion,  including  net cash flow of $1.3  billion  in the third
     quarter, the business' best net cash flow quarter in more than 2 years.

o    Principal  International,  the company's business in Latin America and Asia
     delivered  a record  $19.7  million  in  operating  earnings  in the  third
     quarter, contributing to 68 percent growth in earnings year-to-date.

o    Principal Global Investors' operating earnings improved 65 percent compared
     to a year ago to $18.0  million  in third  quarter  2005,  and are up $16.8
     million, or 44 percent through nine months, driven by a 41 percent or $11.8
     billion  increase in third party  assets under  management  compared to the
     year ago quarter.

"Strong  growth in our  retirement  and  asset  management  businesses  reflects
continued enhancements to distribution,  improvements in investment performance,
and a  significantly  expanded array of value-added  solutions,"  said Griswell.
"We're also making meaningful progress in profitably growing our life and health
insurance  businesses,  with record operating  revenues of $1.1 billion in third
quarter 2005. And for the third quarter and  year-to-date,  reflecting very good
sales and retention,  both the Individual Life and Specialty  Benefits divisions
have achieved double-digit  operating earnings growth,  driving segment earnings
up solidly to $211 million for the first nine months."

                                       3
<PAGE>

Additional highlights:

o    Net income  available  to common  stockholders  for the nine  months  ended
     September 30, 2005 increased to $654.4 million,  or $2.23 per diluted share
     compared  to $612.1  million,  or $1.92 per diluted  share  during the same
     period a year ago.

o    Operating  earnings for the nine months ended  September 30, 2005 increased
     14 percent  to $644.5  million,  from  $565.1  million in the year  earlier
     period.

o    Operating revenues for the nine months ended September 30, 2005 increased 6
     percent to  $6,561.3  million  from  $6,202.9  million in the year  earlier
     period.

o    Record total company assets under  management (AUM) of $188.4 billion as of
     September 30, 2005, an increase of $34.0 billion or 22 percent  compared to
     September 30, 2004.(3)

o    Continued strong sales of the company's other key retirement and investment
     products,  including  $817  million for mutual  funds and $450  million for
     individual  annuities in third quarter  2005,  driving nine month totals to
     $2.5 billion and $1.5 billion, respectively.


                               SEGMENT HIGHLIGHTS

U.S. ASSET MANAGEMENT AND ACCUMULATION

Segment operating earnings for third quarter 2005 were $133.3 million,  compared
to $123.5 million for the same period in 2004. The increase was primarily driven
by a $7.1 million increase in Principal Global  Investors  earnings,  reflecting
continued  strong  growth in  assets  under  management  and  record  commercial
mortgage  securitization  earnings,  and a $5.5 million increase in pension full
service  accumulation  earnings,  reflecting  continued strong growth in account
values.

Operating  revenues for the third quarter  increased 5 percent to $975.4 million
compared to $931.3 million for the same period in 2004.  Increased fee revenues,
reflecting  higher  account  values for pension  full service  accumulation  and
higher assets under management for Principal Global Investors,  more than offset
lower sales of single  premium  group  annuities.  The single  premium  product,
typically  used to fund defined  benefit plan  terminations,  can generate large
premiums  from very few  customers  and  therefore  tends to vary from period to
period. Excluding this product, revenues for the segment increased 8 percent.

Segment assets under management continued to increase,  reaching a record $159.0
billion as of September  30, 2005,  up 3 percent from $154.8  billion as of June
30, 2005,  and up 22 percent from $130.5  billion as of September 30, 2004.  (3)
Pension  full  service  accumulation  account  values  were $75.1  billion as of
September 30, 2005  compared to $60.0  billion as of September  30, 2004.  Third
quarter 2005 account values  reflect the fourth quarter 2004  acquisition of ABN
AMRO Trust  Services  Company,  which included $4.0 billion of account values at
the time of purchase.

INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION

Segment  operating  earnings for third  quarter 2005 were a record $19.7 million
(which  included tax benefits of $1.0  million),  compared to $10.9  million for
third  quarter  2004  (which  included  tax  benefits  of $3.2  million).  After
adjusting for the tax benefits in both periods,  approximately two-thirds of the
increase from third quarter 2004 reflects


                                       4
<PAGE>

improved  operating  performance,  primarily in the pension operations in Mexico
and Brazil,  driven by continued strong growth in assets under  management.  The
increase also reflects  refinement  of accrued  revenues in the Mexican  pension
business.

Operating  revenues  were $148.4  million for third  quarter  2005,  compared to
$136.0 million for the same period last year,  primarily due to higher  revenues
in Mexico,  including improved net cash flows from pension plan participants and
higher single premium annuity sales.

Assets under  management  for the segment were $14.7 billion as of September 30,
2005,  compared  to $11.8  billion as of June 30,  2005,  and  compared  to $9.1
billion as of September 30, 2004.(4)

LIFE AND HEALTH INSURANCE

Segment operating  earnings for third quarter 2005 were $65.4 million,  compared
to $71.6 million for the same period in 2004.  Higher earnings in the Individual
Life division,  reflecting  improved claim results,  as well as in the Specialty
Benefits division,  reflecting improved claim results and strong premium growth,
were more than  offset by a decline in Health  division  earnings  due to higher
loss ratios.

Operating  revenues  increased  to a record  $1,106.1  million for the  quarter,
compared to $1,051.8  million  for the same period in 2004.  Specialty  Benefits
revenues  increased 15 percent,  driven by strong sales and steady  retention in
each of the  division's  product lines.  Health  division  revenues  increased 4
percent,  primarily due to higher premium per member and a 4 percent increase in
total group medical  covered  members.  Individual Life revenues were relatively
flat, 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 premium are not reported as GAAP revenue.

CORPORATE AND OTHER

Operating losses for third quarter 2005 were $4.1 million, compared to operating
losses  of $0.8  million  for the same  period  in 2004.  As  operations  in the
corporate  segment are diverse,  many items  contributed  to the  variance.  The
primary  contributor to higher operating losses was the preferred stock dividend
declared in third quarter 2005, associated with the company's June 2005 issuance
of non-cumulative  perpetual preferred stock. The dividend reduced third quarter
2005  operating  results  within the  Corporate  segment by $9.4 million with no
corresponding  activity in the year earlier  period.  Higher  earnings from real
estate  operations and a benefit due to tax-related  matters  largely offset the
impact of the dividend.

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, 2004, and in the company's quarterly report on Form 10-Q
for the quarter  ended June 30, 2005,  filed by the company with the  Securities
and  Exchange  Commission.   These  risks  and  uncertainties  include,  without


                                       5
<PAGE>

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
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.

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  is  subject  to a  market  price
adjustment  provision based on the volume weighted average market price over the
execution period. The company currently expects the program to be fully executed
by the end of  November  2005,  and  estimates  paying a true-up  adjustment  of
approximately $80 million, based on share price appreciation to date.

STOCK OPTIONS
The company  expenses  employee  stock options and the employee  stock  purchase
plan,  resulting  in an  after-tax  expense of $5.8  million and $16.3  million,
respectively for the three and nine months ended September 30, 2005, compared to
$5.4 million and $16.8 million, respectively for the three and nine months ended
September 30, 2004.

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 Principal  Financial  Group  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 9732195.  Replays will be available  through November 8, 2005.
The  financial  supplement  is  currently  available  on our website and will be
referred to during the conference call.

OUTLOOK FOR FULL YEAR 2006
In early December 2005, in a separate release,  the company will communicate its
outlook for the year ended December 31, 2006,  including expected ranges for net
income available to common stockholders per diluted share and operating earnings
per diluted share.

                                       6
<PAGE>

ABOUT THE PRINCIPAL FINANCIAL GROUP
The Principal  Financial Group(R) (The Principal (R))(5) 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 $188.4
billion in assets under  management(6)  and serves some 15.3  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* IN MILLIONS
                                                     -------------------------------------------------------------
                                                          THREE MONTHS ENDED,            NINE MONTHS ENDED,
                                                     ------------------------------ ------------------------------
<S>                                                       <C>            <C>            <C>             <C>
                                           SEGMENT        9/30/05         9/30/04        9/30/05        9/30/04
---------------------------------------------------- --------------- -------------- -------------- ---------------
             U.S. ASSET MANAGEMENT AND ACCUMULATION          $133.3         $123.5         $402.4          $364.7
---------------------------------------------------- --------------- -------------- -------------- ---------------
    INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION            19.7           10.9           48.3            28.8
---------------------------------------------------- --------------- -------------- -------------- ---------------
                          LIFE AND HEALTH INSURANCE            65.4           71.6          211.2           203.3
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                   MORTGAGE BANKING              -              -              -            (10.3)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                CORPORATE AND OTHER            (4.1)          (0.8)         (17.4)          (21.4)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                 OPERATING EARNINGS           214.3          205.2          644.5           565.1
---------------------------------------------------- --------------- -------------- -------------- ---------------
                    NET REALIZED/UNREALIZED CAPITAL
                                LOSSES, AS ADJUSTED            (4.2)         (10.6)          (4.7)          (78.2)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                        OTHER AFTER-TAX ADJUSTMENTS            (0.1)         104.2           14.6           125.2
---------------------------------------------------- --------------- -------------- -------------- ---------------
        NET INCOME AVAILABLE TO COMMON STOCKHOLDERS          $210.0         $298.8         $654.4          $612.1

                                                          PER DILUTED EARNINGS PER SHARE AVAILABLE TO
                                                                         COMMON STOCKHOLDERS

                                                          THREE MONTHS ENDED,            NINE MONTHS ENDED,
                                                     ------------------------------ ------------------------------
                                                          9/30/05         9/30/04        9/30/05        9/30/04
                                                     --------------- -------------- -------------- ---------------
                                 OPERATING EARNINGS      $  0.75          $ 0.66         $ 2.19         $  1.78
---------------------------------------------------- --------------- -------------- -------------- ---------------
                    NET REALIZED/UNREALIZED CAPITAL
                                LOSSES, AS ADJUSTED        (0.01)          (0.03)         (0.01)          (0.25)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                        OTHER AFTER-TAX ADJUSTMENTS         -               0.32           0.05            0.39
---------------------------------------------------- --------------- -------------- -------------- ---------------
        NET INCOME AVAILABLE TO COMMON STOCKHOLDERS      $  0.74          $ 0.95         $ 2.23         $  1.92
---------------------------------------------------- --------------- -------------- -------------- ---------------
 WEIGHTED-AVERAGE DILUTED COMMON SHARES OUTSTANDING       283.9           313.0          294.0           318.0
---------------------------------------------------- --------------- -------------- -------------- ---------------
</TABLE>

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

                                       8
<PAGE>

<TABLE>
<CAPTION>
                         PRINCIPAL FINANCIAL GROUP, INC.
                              RESULTS OF OPERATIONS
                                  (IN MILLIONS)

                                                       THREE MONTHS ENDED               NINE MONTHS ENDED
                                                 ---------------- --------------- --------------- ---------------
                                                     9/30/05         9/30/04         9/30/05         9/30/04
                                                 ---------------- --------------- --------------- ---------------

<S>                                                    <C>             <C>             <C>             <C>
Premiums and other considerations                      $  943.4        $  923.8        $2,826.4        $2,736.8
Fees and other revenues                                   423.3           363.6         1,245.8         1,060.4
Net investment income                                     853.5           822.6         2,483.4         2,396.4
Net realized/unrealized capital gains (losses)             (1.8)          (21.3)            6.9         (130.1)
                                                 ---------------- --------------- --------------- ---------------
  TOTAL REVENUES                                        2,218.4         2,088.7         6,562.5         6,063.5
                                                 ---------------- --------------- --------------- ---------------
Benefits, claims, and settlement expenses               1,281.3         1,238.0         3,780.1         3,645.2
Dividends to policyholders                                 73.9            72.0           219.0           219.7
Operating expenses                                        576.8           543.3         1,714.5         1,593.9
                                                 ---------------- --------------- --------------- ---------------
  TOTAL EXPENSES                                        1,932.0         1,853.3         5,713.6         5,458.8
                                                 ---------------- --------------- --------------- ---------------
Income from continuing operations before
  income taxes                                            286.4           235.4           848.9           604.7
Income taxes                                               67.1            40.7           201.1           118.8
                                                 ---------------- --------------- --------------- ---------------
Income from continuing operations, net of
  related income taxes                                    219.3           194.7           647.8           485.9
Income from discontinued operations, net of
  related taxes                                             0.1           104.1            16.0           131.9
                                                 ---------------- --------------- --------------- ---------------
Income before cumulative effect of
  accounting change                                       219.4           298.8           663.8           617.8
Cumulative effect of accounting change, net
  of related income taxes                                   -               -               -              (5.7)
                                                 ---------------- --------------- --------------- ---------------
NET INCOME                                                219.4           298.8           663.8           612.1
Preferred stock dividends                                   9.4               -             9.4              -
                                                 ---------------- --------------- --------------- ---------------
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS            $  210.0        $  298.8        $  654.4        $  612.1

Less:
Net realized/unrealized capital losses, as
  adjusted                                                 (4.2)          (10.6)           (4.7)          (78.2)
Other after-tax adjustments                                (0.1)          104.2            14.6           125.2
                                                 ---------------- --------------- --------------- ---------------
OPERATING EARNINGS                                     $  214.3        $  205.2        $  644.5        $  565.1
                                                 ================ =============== =============== ===============
</TABLE>

<TABLE>
<CAPTION>
                       SELECTED BALANCE SHEET STATISTICS
                                                                  PERIOD ENDED
                                                     --------------------- -------------------- -----------------
                                                           9/30/05              12/31/04            9/30/04
                                                     --------------------- -------------------- -----------------
<S>                                                        <C>                  <C>               <C>
Total assets (in billions)                                 $   121.1            $   113.8         $   109.8
Total common equity (in millions)                          $ 7,800.1            $ 7,544.3         $ 7,694.4
Total common equity excluding accumulated other
  comprehensive income (in millions)                       $ 6,635.6            $ 6,231.0         $ 6,412.2
End of period common shares outstanding (in
  millions)                                                    279.9                300.6             307.0
Book value per common share                                $    25.93           $    25.10        $    25.06
Book value per common share excluding
  accumulated other comprehensive income                   $    21.77           $    20.73        $    20.89

</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           NINE MONTHS ENDED
                                                             ----------------------------- ---------------------------
                                                                    9/30/05      9/30/04       9/30/05       9/30/04
                                                             -------------- -------------- ------------- -------------
<S>                                                                   <C>            <C>           <C>           <C>
DILUTED EARNINGS PER COMMON SHARE:
Operating Earnings                                                    0.75           0.66          2.19          1.78
Net realized/unrealized capital losses                               (0.01)         (0.03)        (0.01)        (0.25)
Other after-tax adjustments                                           -              0.32          0.05          0.39
                                                             -------------- -------------- ------------- -------------
Net income available to common stockholders                           0.74            0.95         2.23          1.92
                                                             ============== ============== ============= =============

BOOK VALUE PER COMMON SHARE EXCLUDING OTHER
  COMPREHENSIVE INCOME:
Book value per common share excluding other comprehensive
  income                                                             21.77           20.89        21.77         20.89
Net unrealized capital gains                                          4.32            4.58         4.32          4.58
Foreign currency translation                                         (0.14)          (0.41)       (0.14)        (0.41)
Minimum pension liability                                            (0.02)           -           (0.02)         -
                                                             -------------- -------------- ------------- -------------
Book value per common share including other comprehensive
  income                                                             25.93           25.06        25.93         25.06
                                                             ============== ============== ============= =============
OPERATING REVENUES:
USAMA                                                               975.4           931.3      2,903.8       2,731.4
IAMA                                                                148.4           136.0        439.4         371.3
Life and Health                                                   1,106.1         1,051.8      3,264.2       3,117.8
Corporate and Other                                                  (8.0)           (7.3)       (46.1)        (17.6)
                                                             -------------- -------------- ------------- -------------
Total operating revenues                                          2,221.9         2,111.8      6,561.3       6,202.9
Add:  Net realized/unrealized capital gains (losses) and
  related fee adjustments                                            (3.2)          (23.2)         3.4        (137.9)
Less:  Operating revenues from discontinued real estate               0.3            (0.1)         2.2           1.5
                                                            -------------- -------------- ------------- -------------
Total GAAP revenues                                               2,218.4         2,088.7      6,562.5       6,063.5
                                                             ============== ============== ============= =============
OPERATING EARNINGS:
USAMA                                                               133.3           123.5        402.4         364.7
IAMA                                                                 19.7            10.9         48.3          28.8
Life and Health                                                      65.4            71.6        211.2         203.3
Mortgage Banking                                                      -               -            -           (10.3)
Corporate and Other                                                  (4.1)           (0.8)       (17.4)        (21.4)
                                                             -------------- -------------- ------------- -------------
Total operating earnings                                            214.3           205.2        644.5         565.1
Net realized/unrealized capital losses                               (4.2)          (10.6)        (4.7)        (78.2)
Other after-tax adjustments                                          (0.1)          104.2         14.6         125.2
                                                             -------------- -------------- ------------- -------------
Net income available to common stockholders                         210.0           298.8        654.4         612.1
                                                             ============== ============== ============= =============

NET REALIZED/UNREALIZED CAPITAL GAINS (LOSSES):
Net realized/unrealized capital losses, as adjusted                  (4.2)          (10.6)        (4.7)        (78.2)
Add:
Amortization of DPAC and sale inducement costs                       (3.6)            0.6          0.3          (2.0)
Capital gains distributed                                             2.6             0.1          3.8           1.3
Tax impacts                                                           -             (13.4)         1.8         (59.3)
Minority interest capital gains                                       2.0             0.1          2.2           0.3
Less related fee adjustments:
Unearned front-end fee income                                        (1.0)            -            0.8          (0.1)
Certain market value adjustments to fee revenues                     (0.4)           (1.9)        (4.3)         (7.7)
                                                             -------------- -------------- ------------- -------------
GAAP net realized/unrealized capital gains (losses)                  (1.8)          (21.3)         6.9        (130.1)
                                                             ============== ============== ============= =============

OTHER AFTER TAX ADJUSTMENTS:
SOP 03-1 implementation                                               -               -            -            (5.7)
Discontinued operations - Mortgage Banking                           (7.7)           94.1         (7.7)        120.6
Discontinued operations - Argentina                                   -              10.1          -            10.3
Gain on disposal of discontinued real estate                          7.6             -           22.3           -
                                                             -------------- -------------- ------------- -------------
Total other after-tax adjustments                                    (0.1)          104.2         14.6         125.2
                                                             ============== ============== ============= =============

</TABLE>

                                       10
<PAGE>


--------
(1)  Segment  highlights that follow discuss a number of items  benefiting third
     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)  AUM as of September  30, 2005  includes  $228 million of amounts  funded by
     Principal  Life Insurance  Company or third party  investors for structured
     credit  transactions.  These  structures  have $6.4  billion of  underlying
     reference  portfolio value that is managed by Principal  Global  Investors.
     Prior to September 30, 2005, the underlying  reference  portfolio value had
     been included in AUM. Previously reported assets under management have been
     adjusted to reflect this change.  Separately,  Principal  Global  Investors
     services   $7.4  billion  of   commercial   mortgages  it  has   previously
     securitized, which are not included in AUM.
(4)  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 are included in segment AUM as of
     September 30, 2005.
(5)  "The Principal  Financial Group" and "The Principal" are registered service
     marks of Principal  Financial  Services,  Inc.,  a member of the  Principal
     Financial Group.
(6)  As of September 30, 2005



                                       11
<PAGE>
[{"type": "8-K", "sequence": "1", "filename": "pr3q05pressrelease.txt", "description": "FORM 8-K", "secsgml_size_bytes": 39771}]
{"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": "051168102"}, "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: OCTOBER 31, 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  October  31,  2005,  Principal  Financial  Group,  Inc.  publicly  announced
information  regarding its results of operations and financial condition for the
quarter  ended  September  30, 2005.  The text of the  announcement  is included
herewith as Exhibit 99.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

99 Third 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:    November 1, 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 THIRD QUARTER 2005 RESULTS

Des Moines, IA (October 31, 2005) - Principal  Financial Group, Inc. (NYSE: PFG)
today announced net income available to common stockholders for the three months
ended  September 30, 2005, of $210.0 million,  or $0.74 per diluted share.  This
compares to $298.8  million (which  included  gains of $94.1 million  associated
with  the  sale of  Principal  Residential  Mortgage,  Inc.  and  $10.1  million
associated with the sale of operations in Argentina), or $0.95 per diluted share
for the three months ended  September 30, 2004. The company  reported  operating
earnings of $214.3 million for third quarter 2005(1), compared to $205.2 million
for third  quarter  2004.  Operating  earnings per diluted share (EPS) for third
quarter 2005 were $0.75 compared to $0.66 for the same period in 2004. Operating
revenues  for third  quarter  2005 were  $2,221.9  million  compared to $2,111.8
million for the same period last year.(2)

"With our  initial  public  offering  in October  2001,  we set some  aggressive
long-term growth targets,  including 11 to 13 percent annual growth in operating
earnings  per  diluted  share,"  said J.  Barry  Griswell,  chairman  and  chief
executive  officer.  "Four years later,  we've  established  The Principal as an
organization that delivers, with results year-to-date  underscoring that point -
third quarter EPS is up 14 percent to 75 cents, and through nine months,  EPS is
$2.19, an increase of 23 percent compared to the year ago period."

"We  committed  to driving  growth by building on our U.S.  retirement  services
leadership;    by   leveraging   our   retirement   leadership   and   expertise
internationally;  and by  creating a  successful  global  asset  manager,"  said
Griswell.  "Again,  results  for the  quarter  and  year-to-date  emphasize  our
continued success."

o    Operating  earnings for the  company's  largest U.S.  retirement  business,
     pension  full  service  accumulation,  are up 10 percent from a year ago to
     $62.7 million and up 12 percent through nine months to $185.5 million.

o    Organic full service  accumulation  sales were a record $1.9 billion in the
     third  quarter,  driving the nine month total to nearly $4.5  billion,  and
     positioning  the company to achieve or exceed its full year  organic  sales
     target of $5.7 to $5.8 billion.

o    Full service  accumulation account values are up 25 percent from a year ago
     at $75.1  billion,  including  net cash flow of $1.3  billion  in the third
     quarter, the business' best net cash flow quarter in more than 2 years.

o    Principal  International,  the company's business in Latin America and Asia
     delivered  a record  $19.7  million  in  operating  earnings  in the  third
     quarter, contributing to 68 percent growth in earnings year-to-date.

o    Principal Global Investors' operating earnings improved 65 percent compared
     to a year ago to $18.0  million  in third  quarter  2005,  and are up $16.8
     million, or 44 percent through nine months, driven by a 41 percent or $11.8
     billion  increase in third party  assets under  management  compared to the
     year ago quarter.

"Strong  growth in our  retirement  and  asset  management  businesses  reflects
continued enhancements to distribution,  improvements in investment performance,
and a  significantly  expanded array of value-added  solutions,"  said Griswell.
"We're also making meaningful progress in profitably growing our life and health
insurance  businesses,  with record operating  revenues of $1.1 billion in third
quarter 2005. And for the third quarter and  year-to-date,  reflecting very good
sales and retention,  both the Individual Life and Specialty  Benefits divisions
have achieved double-digit  operating earnings growth,  driving segment earnings
up solidly to $211 million for the first nine months."

                                       3
Additional highlights:

o    Net income  available  to common  stockholders  for the nine  months  ended
     September 30, 2005 increased to $654.4 million,  or $2.23 per diluted share
     compared  to $612.1  million,  or $1.92 per diluted  share  during the same
     period a year ago.

o    Operating  earnings for the nine months ended  September 30, 2005 increased
     14 percent  to $644.5  million,  from  $565.1  million in the year  earlier
     period.

o    Operating revenues for the nine months ended September 30, 2005 increased 6
     percent to  $6,561.3  million  from  $6,202.9  million in the year  earlier
     period.

o    Record total company assets under  management (AUM) of $188.4 billion as of
     September 30, 2005, an increase of $34.0 billion or 22 percent  compared to
     September 30, 2004.(3)

o    Continued strong sales of the company's other key retirement and investment
     products,  including  $817  million for mutual  funds and $450  million for
     individual  annuities in third quarter  2005,  driving nine month totals to
     $2.5 billion and $1.5 billion, respectively.

                               SEGMENT HIGHLIGHTS

U.S. ASSET MANAGEMENT AND ACCUMULATION

Segment operating earnings for third quarter 2005 were $133.3 million,  compared
to $123.5 million for the same period in 2004. The increase was primarily driven
by a $7.1 million increase in Principal Global  Investors  earnings,  reflecting
continued  strong  growth in  assets  under  management  and  record  commercial
mortgage  securitization  earnings,  and a $5.5 million increase in pension full
service  accumulation  earnings,  reflecting  continued strong growth in account
values.

Operating  revenues for the third quarter  increased 5 percent to $975.4 million
compared to $931.3 million for the same period in 2004.  Increased fee revenues,
reflecting  higher  account  values for pension  full service  accumulation  and
higher assets under management for Principal Global Investors,  more than offset
lower sales of single  premium  group  annuities.  The single  premium  product,
typically  used to fund defined  benefit plan  terminations,  can generate large
premiums  from very few  customers  and  therefore  tends to vary from period to
period. Excluding this product, revenues for the segment increased 8 percent.

Segment assets under management continued to increase,  reaching a record $159.0
billion as of September  30, 2005,  up 3 percent from $154.8  billion as of June
30, 2005,  and up 22 percent from $130.5  billion as of September 30, 2004.  (3)
Pension  full  service  accumulation  account  values  were $75.1  billion as of
September 30, 2005  compared to $60.0  billion as of September  30, 2004.  Third
quarter 2005 account values  reflect the fourth quarter 2004  acquisition of ABN
AMRO Trust  Services  Company,  which included $4.0 billion of account values at
the time of purchase.

INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION

Segment  operating  earnings for third  quarter 2005 were a record $19.7 million
(which  included tax benefits of $1.0  million),  compared to $10.9  million for
third  quarter  2004  (which  included  tax  benefits  of $3.2  million).  After
adjusting for the tax benefits in both periods,  approximately two-thirds of the
increase from third quarter 2004 reflects

                                       4
improved  operating  performance,  primarily in the pension operations in Mexico
and Brazil,  driven by continued strong growth in assets under  management.  The
increase also reflects  refinement  of accrued  revenues in the Mexican  pension
business.

Operating  revenues  were $148.4  million for third  quarter  2005,  compared to
$136.0 million for the same period last year,  primarily due to higher  revenues
in Mexico,  including improved net cash flows from pension plan participants and
higher single premium annuity sales.

Assets under  management  for the segment were $14.7 billion as of September 30,
2005,  compared  to $11.8  billion as of June 30,  2005,  and  compared  to $9.1
billion as of September 30, 2004.(4)

LIFE AND HEALTH INSURANCE

Segment operating  earnings for third quarter 2005 were $65.4 million,  compared
to $71.6 million for the same period in 2004.  Higher earnings in the Individual
Life division,  reflecting  improved claim results,  as well as in the Specialty
Benefits division,  reflecting improved claim results and strong premium growth,
were more than  offset by a decline in Health  division  earnings  due to higher
loss ratios.

Operating  revenues  increased  to a record  $1,106.1  million for the  quarter,
compared to $1,051.8  million  for the same period in 2004.  Specialty  Benefits
revenues  increased 15 percent,  driven by strong sales and steady  retention in
each of the  division's  product lines.  Health  division  revenues  increased 4
percent,  primarily due to higher premium per member and a 4 percent increase in
total group medical  covered  members.  Individual Life revenues were relatively
flat, 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 premium are not reported as GAAP revenue.

CORPORATE AND OTHER

Operating losses for third quarter 2005 were $4.1 million, compared to operating
losses  of $0.8  million  for the same  period  in 2004.  As  operations  in the
corporate  segment are diverse,  many items  contributed  to the  variance.  The
primary  contributor to higher operating losses was the preferred stock dividend
declared in third quarter 2005, associated with the company's June 2005 issuance
of non-cumulative  perpetual preferred stock. The dividend reduced third quarter
2005  operating  results  within the  Corporate  segment by $9.4 million with no
corresponding  activity in the year earlier  period.  Higher  earnings from real
estate  operations and a benefit due to tax-related  matters  largely offset the
impact of the dividend.

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, 2004, and in the company's quarterly report on Form 10-Q
for the quarter  ended June 30, 2005,  filed by the company with the  Securities
and  Exchange  Commission.   These  risks  and  uncertainties  include,  without

                                       5
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
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.

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  is  subject  to a  market  price
adjustment  provision based on the volume weighted average market price over the
execution period. The company currently expects the program to be fully executed
by the end of  November  2005,  and  estimates  paying a true-up  adjustment  of
approximately $80 million, based on share price appreciation to date.

STOCK OPTIONS
The company  expenses  employee  stock options and the employee  stock  purchase
plan,  resulting  in an  after-tax  expense of $5.8  million and $16.3  million,
respectively for the three and nine months ended September 30, 2005, compared to
$5.4 million and $16.8 million, respectively for the three and nine months ended
September 30, 2004.

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 Principal  Financial  Group  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 9732195.  Replays will be available  through November 8, 2005.
The  financial  supplement  is  currently  available  on our website and will be
referred to during the conference call.

OUTLOOK FOR FULL YEAR 2006
In early December 2005, in a separate release,  the company will communicate its
outlook for the year ended December 31, 2006,  including expected ranges for net
income available to common stockholders per diluted share and operating earnings
per diluted share.

                                       6
ABOUT THE PRINCIPAL FINANCIAL GROUP
The Principal  Financial Group(R) (The Principal (R))(5) 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 $188.4
billion in assets under  management(6)  and serves some 15.3  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* IN MILLIONS
                                                     -------------------------------------------------------------
                                                          THREE MONTHS ENDED,            NINE MONTHS ENDED,
                                                     ------------------------------ ------------------------------
SEGMENT        9/30/05         9/30/04        9/30/05        9/30/04
---------------------------------------------------- --------------- -------------- -------------- ---------------
             U.S. ASSET MANAGEMENT AND ACCUMULATION          $133.3         $123.5         $402.4          $364.7
---------------------------------------------------- --------------- -------------- -------------- ---------------
    INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION            19.7           10.9           48.3            28.8
---------------------------------------------------- --------------- -------------- -------------- ---------------
                          LIFE AND HEALTH INSURANCE            65.4           71.6          211.2           203.3
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                   MORTGAGE BANKING              -              -              -            (10.3)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                CORPORATE AND OTHER            (4.1)          (0.8)         (17.4)          (21.4)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                 OPERATING EARNINGS           214.3          205.2          644.5           565.1
---------------------------------------------------- --------------- -------------- -------------- ---------------
                    NET REALIZED/UNREALIZED CAPITAL
                                LOSSES, AS ADJUSTED            (4.2)         (10.6)          (4.7)          (78.2)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                        OTHER AFTER-TAX ADJUSTMENTS            (0.1)         104.2           14.6           125.2
---------------------------------------------------- --------------- -------------- -------------- ---------------
        NET INCOME AVAILABLE TO COMMON STOCKHOLDERS          $210.0         $298.8         $654.4          $612.1

                                                          PER DILUTED EARNINGS PER SHARE AVAILABLE TO
                                                                         COMMON STOCKHOLDERS

                                                          THREE MONTHS ENDED,            NINE MONTHS ENDED,
                                                     ------------------------------ ------------------------------
                                                          9/30/05         9/30/04        9/30/05        9/30/04
                                                     --------------- -------------- -------------- ---------------
                                 OPERATING EARNINGS      $  0.75          $ 0.66         $ 2.19         $  1.78
---------------------------------------------------- --------------- -------------- -------------- ---------------
                    NET REALIZED/UNREALIZED CAPITAL
                                LOSSES, AS ADJUSTED        (0.01)          (0.03)         (0.01)          (0.25)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                        OTHER AFTER-TAX ADJUSTMENTS         -               0.32           0.05            0.39
---------------------------------------------------- --------------- -------------- -------------- ---------------
        NET INCOME AVAILABLE TO COMMON STOCKHOLDERS      $  0.74          $ 0.95         $ 2.23         $  1.92
---------------------------------------------------- --------------- -------------- -------------- ---------------
 WEIGHTED-AVERAGE DILUTED COMMON SHARES OUTSTANDING       283.9           313.0          294.0           318.0
---------------------------------------------------- --------------- -------------- -------------- ---------------
*OPERATING EARNINGS VERSUS U.S. GAAP (GAAP) NET INCOME
Management   uses  operating   earnings,   which  excludes  the  effect  of  net
realized/unrealized  capital gains and losses, as adjusted,  and other after-tax
adjustments, for goal setting, determining employee compensation, and evaluating
performance on a basis comparable to that used by securities  analysts.  Segment
operating  earnings are  determined  by adjusting  U.S.  GAAP net income for net
realized/unrealized  capital gains and losses, as adjusted,  and other after-tax
adjustments we believe are not  indicative of overall  operating  trends.  Note:
after-tax  adjustments  have  occurred  in the past and  could  recur in  future
reporting  periods.   While  these  items  may  be  significant   components  in
understanding and assessing our consolidated financial  performance,  we believe
the presentation of segment operating earnings enhances the understanding of our
results of  operations  by  highlighting  earnings  attributable  to the normal,
ongoing operations of our businesses.

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

                                                       THREE MONTHS ENDED               NINE MONTHS ENDED
                                                 ---------------- --------------- --------------- ---------------
                                                     9/30/05         9/30/04         9/30/05         9/30/04
                                                 ---------------- --------------- --------------- ---------------
Premiums and other considerations                      $  943.4        $  923.8        $2,826.4        $2,736.8
Fees and other revenues                                   423.3           363.6         1,245.8         1,060.4
Net investment income                                     853.5           822.6         2,483.4         2,396.4
Net realized/unrealized capital gains (losses)             (1.8)          (21.3)            6.9         (130.1)
                                                 ---------------- --------------- --------------- ---------------
  TOTAL REVENUES                                        2,218.4         2,088.7         6,562.5         6,063.5
                                                 ---------------- --------------- --------------- ---------------
Benefits, claims, and settlement expenses               1,281.3         1,238.0         3,780.1         3,645.2
Dividends to policyholders                                 73.9            72.0           219.0           219.7
Operating expenses                                        576.8           543.3         1,714.5         1,593.9
                                                 ---------------- --------------- --------------- ---------------
  TOTAL EXPENSES                                        1,932.0         1,853.3         5,713.6         5,458.8
                                                 ---------------- --------------- --------------- ---------------
Income from continuing operations before
  income taxes                                            286.4           235.4           848.9           604.7
Income taxes                                               67.1            40.7           201.1           118.8
                                                 ---------------- --------------- --------------- ---------------
Income from continuing operations, net of
  related income taxes                                    219.3           194.7           647.8           485.9
Income from discontinued operations, net of
  related taxes                                             0.1           104.1            16.0           131.9
                                                 ---------------- --------------- --------------- ---------------
Income before cumulative effect of
  accounting change                                       219.4           298.8           663.8           617.8
Cumulative effect of accounting change, net
  of related income taxes                                   -               -               -              (5.7)
                                                 ---------------- --------------- --------------- ---------------
NET INCOME                                                219.4           298.8           663.8           612.1
Preferred stock dividends                                   9.4               -             9.4              -
                                                 ---------------- --------------- --------------- ---------------
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS            $  210.0        $  298.8        $  654.4        $  612.1

Less:
Net realized/unrealized capital losses, as
  adjusted                                                 (4.2)          (10.6)           (4.7)          (78.2)
Other after-tax adjustments                                (0.1)          104.2            14.6           125.2
                                                 ---------------- --------------- --------------- ---------------
OPERATING EARNINGS                                     $  214.3        $  205.2        $  644.5        $  565.1
                                                 ================ =============== =============== ===============
SELECTED BALANCE SHEET STATISTICS
                                                                  PERIOD ENDED
                                                     --------------------- -------------------- -----------------
                                                           9/30/05              12/31/04            9/30/04
                                                     --------------------- -------------------- -----------------
Total assets (in billions)                                 $   121.1            $   113.8         $   109.8
Total common equity (in millions)                          $ 7,800.1            $ 7,544.3         $ 7,694.4
Total common equity excluding accumulated other
  comprehensive income (in millions)                       $ 6,635.6            $ 6,231.0         $ 6,412.2
End of period common shares outstanding (in
  millions)                                                    279.9                300.6             307.0
Book value per common share                                $    25.93           $    25.10        $    25.06
Book value per common share excluding
  accumulated other comprehensive income                   $    21.77           $    20.73        $    20.89
9
PRINCIPAL FINANCIAL GROUP, INC.
           RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO U.S. GAAP
                       (IN MILLIONS, EXCEPT AS INDICATED)
                                                                    THREE MONTHS ENDED           NINE MONTHS ENDED
                                                             ----------------------------- ---------------------------
                                                                    9/30/05      9/30/04       9/30/05       9/30/04
                                                             -------------- -------------- ------------- -------------
DILUTED EARNINGS PER COMMON SHARE:
Operating Earnings                                                    0.75           0.66          2.19          1.78
Net realized/unrealized capital losses                               (0.01)         (0.03)        (0.01)        (0.25)
Other after-tax adjustments                                           -              0.32          0.05          0.39
                                                             -------------- -------------- ------------- -------------
Net income available to common stockholders                           0.74            0.95         2.23          1.92
                                                             ============== ============== ============= =============

BOOK VALUE PER COMMON SHARE EXCLUDING OTHER
  COMPREHENSIVE INCOME:
Book value per common share excluding other comprehensive
  income                                                             21.77           20.89        21.77         20.89
Net unrealized capital gains                                          4.32            4.58         4.32          4.58
Foreign currency translation                                         (0.14)          (0.41)       (0.14)        (0.41)
Minimum pension liability                                            (0.02)           -           (0.02)         -
                                                             -------------- -------------- ------------- -------------
Book value per common share including other comprehensive
  income                                                             25.93           25.06        25.93         25.06
                                                             ============== ============== ============= =============
OPERATING REVENUES:
USAMA                                                               975.4           931.3      2,903.8       2,731.4
IAMA                                                                148.4           136.0        439.4         371.3
Life and Health                                                   1,106.1         1,051.8      3,264.2       3,117.8
Corporate and Other                                                  (8.0)           (7.3)       (46.1)        (17.6)
                                                             -------------- -------------- ------------- -------------
Total operating revenues                                          2,221.9         2,111.8      6,561.3       6,202.9
Add:  Net realized/unrealized capital gains (losses) and
  related fee adjustments                                            (3.2)          (23.2)         3.4        (137.9)
Less:  Operating revenues from discontinued real estate               0.3            (0.1)         2.2           1.5
                                                            -------------- -------------- ------------- -------------
Total GAAP revenues                                               2,218.4         2,088.7      6,562.5       6,063.5
                                                             ============== ============== ============= =============
OPERATING EARNINGS:
USAMA                                                               133.3           123.5        402.4         364.7
IAMA                                                                 19.7            10.9         48.3          28.8
Life and Health                                                      65.4            71.6        211.2         203.3
Mortgage Banking                                                      -               -            -           (10.3)
Corporate and Other                                                  (4.1)           (0.8)       (17.4)        (21.4)
                                                             -------------- -------------- ------------- -------------
Total operating earnings                                            214.3           205.2        644.5         565.1
Net realized/unrealized capital losses                               (4.2)          (10.6)        (4.7)        (78.2)
Other after-tax adjustments                                          (0.1)          104.2         14.6         125.2
                                                             -------------- -------------- ------------- -------------
Net income available to common stockholders                         210.0           298.8        654.4         612.1
                                                             ============== ============== ============= =============

NET REALIZED/UNREALIZED CAPITAL GAINS (LOSSES):
Net realized/unrealized capital losses, as adjusted                  (4.2)          (10.6)        (4.7)        (78.2)
Add:
Amortization of DPAC and sale inducement costs                       (3.6)            0.6          0.3          (2.0)
Capital gains distributed                                             2.6             0.1          3.8           1.3
Tax impacts                                                           -             (13.4)         1.8         (59.3)
Minority interest capital gains                                       2.0             0.1          2.2           0.3
Less related fee adjustments:
Unearned front-end fee income                                        (1.0)            -            0.8          (0.1)
Certain market value adjustments to fee revenues                     (0.4)           (1.9)        (4.3)         (7.7)
                                                             -------------- -------------- ------------- -------------
GAAP net realized/unrealized capital gains (losses)                  (1.8)          (21.3)         6.9        (130.1)
                                                             ============== ============== ============= =============

OTHER AFTER TAX ADJUSTMENTS:
SOP 03-1 implementation                                               -               -            -            (5.7)
Discontinued operations - Mortgage Banking                           (7.7)           94.1         (7.7)        120.6
Discontinued operations - Argentina                                   -              10.1          -            10.3
Gain on disposal of discontinued real estate                          7.6             -           22.3           -
                                                             -------------- -------------- ------------- -------------
Total other after-tax adjustments                                    (0.1)          104.2         14.6         125.2
                                                             ============== ============== ============= =============
10
--------
(1)  Segment  highlights that follow discuss a number of items  benefiting third
     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)  AUM as of September  30, 2005  includes  $228 million of amounts  funded by
     Principal  Life Insurance  Company or third party  investors for structured
     credit  transactions.  These  structures  have $6.4  billion of  underlying
     reference  portfolio value that is managed by Principal  Global  Investors.
     Prior to September 30, 2005, the underlying  reference  portfolio value had
     been included in AUM. Previously reported assets under management have been
     adjusted to reflect this change.  Separately,  Principal  Global  Investors
     services   $7.4  billion  of   commercial   mortgages  it  has   previously
     securitized, which are not included in AUM.
(4)  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 are included in segment AUM as of
     September 30, 2005.
(5)  "The Principal  Financial Group" and "The Principal" are registered service
     marks of Principal  Financial  Services,  Inc.,  a member of the  Principal
     Financial Group.
(6)  As of September 30, 2005

                                       11