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: JULY 31, 2006
                        (Date of earliest event reported)



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


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


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

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

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

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

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



<PAGE>


ITEM 2.02.  RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On July 31, 2006, Principal Financial Group, Inc. publicly announced information
regarding  its results of  operations  and  financial  condition for the quarter
ended June 30,  2006.  The text of the  announcement  is  included  herewith  as
Exhibit 99.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

99    Second Quarter 2006 Earnings Release




                                    SIGNATURE

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


                                    PRINCIPAL FINANCIAL GROUP, INC.


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

Date:    August 1, 2006


                                       2
<PAGE>


                                                                      Exhibit 99

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

       PRINCIPAL FINANCIAL GROUP, INC. REPORTS SECOND QUARTER 2006 RESULTS

Des Moines,  IA (July 31, 2006) - Principal  Financial Group,  Inc. (NYSE:  PFG)
today announced net income available to common stockholders for the three months
ended June 30, 2006, of $210.5  million,  or $0.76 per diluted share compared to
net income  available to common  stockholders  of $238.9  million,  or $0.82 per
diluted  share for the three months ended June 30,  2005.  The company  reported
operating earnings of $225.2 million for second quarter 2006, compared to $221.0
million for second quarter 2005.  Operating earnings per diluted share (EPS) for
second  quarter  2006 were $0.82  compared to $0.76 for the same period in 2005.
Operating  revenues for second  quarter 2006 were $2,467.3  million  compared to
$2,190.8 million for the same period last year.(1)

"At $225  million of operating  earnings,  the June quarter was one of our best,
second  only to our  record  first  quarter  2006  performance,"  said J.  Barry
Griswell,  chairman and chief executive officer. "Through mid-year, EPS is up 16
percent,  an extremely  strong result as we continue to effectively  execute our
growth strategy and manage our capital."

"In spite of second quarter equity market  declines,  U.S. Asset  Management and
Accumulation earnings were up 16 percent from a year ago, driven by double-digit
earnings growth from full service  accumulation  and individual  annuities,  and
record earnings and 50-plus percent  improvement from Principal Global Investors
and mutual funds," said Griswell.  "Reflecting  significant underlying growth in
account values and assets under  management  (AUM),  U.S.  Asset  Management and
Accumulation earnings were up 15 percent, and International Asset Management and
Accumulation  earnings  were up 18  percent,  combining  for 74 percent of total
company earnings through six months."

"From a year ago, account values in our U.S. asset  accumulation  businesses are
up 14 percent,  or nearly $16 billion.  Principal Global  Investors' third party
institutional  assets under  management  are up $8 billion,  or 20 percent,  and
Principal  International's  AUM is up nearly $3 billion, or 23 percent,(2)" said
Griswell.  "These gains reflect the  competitive  strength of our retirement and
income management offerings, strong investment performance from Principal Global
Investors, and our ongoing focus on distribution and customer satisfaction."


                                       3
<PAGE>

Additional highlights as of June 30, 2006:

o    Record total company assets under management of $206.0 billion, an increase
     of $24.7 billion, or 14 percent compared to June 30, 2005.
o    Continued  strong  organic  sales  of  the  company's  key  retirement  and
     investment  products.  Through six months: full service  accumulation sales
     were $4.0 billion,  up 57 percent ($1.1 billion of sales in second  quarter
     2006); mutual fund sales were $2.0 billion,  up 20 percent;  and individual
     annuity sales were $1.2 billion, up 13 percent.
o    Record  operating  revenues of $1.2 billion in second  quarter 2006 for the
     Life and Health Insurance  segment,  a seventh  consecutive record quarter,
     driven by record revenues from the Health and Specialty Benefits divisions.
     Specialty  Benefits  also  delivered  record  operating  earnings  of $25.7
     million in the second quarter, up 21 percent from the prior year period.

                               SEGMENT HIGHLIGHTS

U.S. ASSET MANAGEMENT AND ACCUMULATION
Segment operating earnings for second quarter 2006 were $151.2 million, compared
to $130.5  million  for the same  period  in 2005.  Principal  Global  Investors
generated  record  earnings  for the  quarter  of $24.1  million,  a 51  percent
increase,   reflecting   management  fee  growth  in  all  lines.  Full  service
accumulation  earnings  improved 12 percent to $69.6 million in second  quarter,
primarily the result of increased fees  generated  from higher  account  values.
Full service  accumulation account values were $82.4 billion as of June 30, 2006
compared to $71.0 billion as of June 30, 2005.

Operating  revenues  for the second  quarter  increased  15 percent to  $1,116.2
million  compared to $971.1  million  for the same  period in 2005,  as revenues
increased in all  businesses  within the segment.  Higher  single  premium group
annuities  sales  were the  largest  single  contributor  to the  increase.  The
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,  segment  revenues  increased nine percent,
primarily due to record  revenues in the full service  accumulation,  individual
annuities and mutual funds businesses.

Segment assets under management continued to increase,  reaching a record $174.9
billion as of June 30, 2006,  up 13 percent  from $154.8  billion as of June 30,
2005.

INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION
Segment  operating  earnings for second  quarter 2006 were $16.1  million.  This
compares to second quarter 2005 earnings of $19.1 million. On a comparable basis
earnings  improved from a year ago,  excluding high inflation linked  investment
yields in Chile and a tax benefit associated with the American Jobs Creation Act
in second  quarter  2005.

Operating  revenues were $164.2  million for second  quarter  2006,  compared to
$158.2 million for the same period last year, as favorable currency  translation
in Chile  and  Brazil  was  partially  offset by lower  sales of single  premium
annuities with life contingencies in Mexico and Chile.

Assets under  management for the segment were $16.3 billion as of June 30, 2006,
compared to $11.8 billion as of June 30, 2005.

                                       4
<PAGE>

LIFE AND HEALTH INSURANCE
Segment operating earnings for second quarter 2006 were $65.2 million.  Compared
to the year ago quarter, higher earnings in the Specialty Benefits division, due
to solid growth and a $3.4 million benefit from a long-term  disability  reserve
refinement,  were more than offset by lower earnings in the Individual  Life and
Health divisions.  Second quarter 2005 earnings of $76.3 million included a $6.6
million  benefit in the  Individual  Life division,  primarily from  methodology
improvements related to reinsurance values, as well as better than normal claims
experience in the group  disability and insured  medical lines.  Individual life
earnings also  declined  from a year ago due to higher claims in second  quarter
2006.

For the  seventh  consecutive  quarter the segment  generated  record  operating
revenues,  an increase  of nine  percent  from the same  period in 2005.  The 16
percent increase in Specialty  Benefits  revenues was driven by strong sales and
steady  retention  in each of the  Specialty  Benefits  lines.  Health  revenues
increased  11  percent,  primarily  due to a nine  percent  increase  in insured
medical covered members.  Individual Life revenues  decreased  slightly,  as the
company continued its shift in marketing emphasis from traditional premium-based
products to fee-based  universal  life and  variable  universal  life  products.
Unlike traditional premium-based products, universal life and variable universal
life deposits are not reported as GAAP revenue.

CORPORATE AND OTHER
Operating  losses  for  second  quarter  2006 were  $7.3  million,  compared  to
operating  losses of $4.9 million for the same period in 2005.  Higher losses in
second quarter 2006 reflect the second  quarter 2006  declaration of a preferred
stock  dividend,  the cost of which reduced segment  operating  earnings by $8.3
million, with no corresponding activity in the second quarter 2005. The earnings
impact of this item was substantially offset by $5.4 million of higher operating
earnings from joint venture real estate activity in second quarter 2006 compared
to second quarter 2005.

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

                                       5
<PAGE>

USE OF NON-GAAP FINANCIAL MEASURES
The  company  uses a number  of  non-GAAP  financial  measures  that  management
believes are useful to investors  because they  illustrate  the  performance  of
normal,  ongoing operations,  which is important in understanding and evaluating
the  company's  financial  condition  and results of  operations.  They are not,
however, a substitute for U.S. GAAP financial measures.  Therefore,  the company
has  provided  reconciliations  of the  non-GAAP  measures to the most  directly
comparable U.S. GAAP measure at the end of the release. The company adjusts U.S.
GAAP measures for items not directly related to ongoing operations.  However, it
is possible these  adjusting  items have occurred in the past and could recur in
the future. Management also uses non-GAAP measures for goal setting, determining
employee  and  senior  management   awards  and  compensation,   and  evaluating
performance  on a basis  comparable  to that used by  investors  and  securities
analysts.

SHARE REPURCHASES
In May 2006,  the company  completed the $250 million share  repurchase  program
authorized  by the Board in  November  2005.  Under this  program,  the  company
repurchased 5.1 million common shares for a cost of $250.0 million.  Also in May
2006,  following  the  Board's  share  repurchase  authorization  of up to  $500
million,  the  company  entered  into an  accelerated  common  stock  repurchase
agreement with an investment bank.  Under this agreement,  the company paid $500
million and received an initial  delivery of  approximately  7.7 million  common
shares,  while retaining the right to receive additional common shares depending
on the volume  weighted  average share price of the company's  common stock over
the  program's  execution  period.  The program is expected to be  completed  in
fourth quarter 2006, at which time the company will receive any remaining common
shares owed to it under the agreement.

EARNINGS CONFERENCE CALL
At 9:00 A.M.  (CDT)  tomorrow,  Chairman and CEO J. Barry Griswell and Executive
Vice  President  and CFO  Mike  Gersie  will  lead a  discussion  during  a live
conference call. Parties interested in listening to the conference call live may
access  the  webcast  on  the   company's   Investor   Relations   (IR)  website
(www.principal.com/investor)  or by dialing  (800)  374-1609  (U.S.  callers) or
(706) 643-7701  (International  callers)  approximately  10 minutes prior to the
start of the call.  To access the call,  leader name is Tom Graf.  Listeners can
access  an audio  replay  of the call on the IR  website,  or by  calling  (800)
642-1687 (US callers) or (706) 645-9291 (International callers). The access code
for the replay is 2068246. Replays will be available through August 8, 2006. The
financial  supplement is currently  available on our website and may be referred
to during the conference call.

                                       6
<PAGE>

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 $206.0
billion in assets under  management(4)  and serves some 16.3  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 (LOSS)* IN MILLIONS
                                                     ------------------------------ ------------------------------
                                                          THREE MONTHS ENDED,             SIX MONTHS ENDED,
<S>                                                       <C>              <C>            <C>             <C>
                                             SEGMENT     6/30/06         6/30/05        6/30/06        6/30/05
---------------------------------------------------- --------------- -------------- -------------- ---------------
             U.S. ASSET MANAGEMENT AND ACCUMULATION       $151.2           $130.5         $309.0          $269.1
---------------------------------------------------- --------------- -------------- -------------- ---------------
    INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION         16.1             19.1           33.7            28.6
---------------------------------------------------- --------------- -------------- -------------- ---------------
                          LIFE AND HEALTH INSURANCE         65.2             76.3          135.6           145.8
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                CORPORATE AND OTHER         (7.3)            (4.9)         (12.9)          (13.3)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                 OPERATING EARNINGS        225.2            221.0          465.4           430.2
---------------------------------------------------- --------------- -------------- -------------- ---------------
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS (LOSSES), AS ADJUSTED        (12.9)             3.2           12.0            (0.5)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                        OTHER AFTER-TAX ADJUSTMENTS         (1.8)            14.7           18.8            14.7
---------------------------------------------------- --------------- -------------- -------------- ---------------
        NET INCOME AVAILABLE TO COMMON STOCKHOLDERS       $210.5           $238.9         $496.2          $444.4
---------------------------------------------------- --------------- -------------- -------------- ---------------

                                                                       PER DILUTED SHARE
                                                     ------------------------------ ------------------------------
                                                          THREE MONTHS ENDED,            SIX MONTHS ENDED,
                                                     --------------- -------------- -------------- ---------------
                                                        6/30/06         6/30/05        6/30/06        6/30/05
                                                     --------------- -------------- -------------- ---------------
                                 OPERATING EARNINGS      $   0.82        $   0.76       $   1.67       $   1.44
---------------------------------------------------- --------------- -------------- -------------- ---------------
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS (LOSSES), AS ADJUSTED         (0.05)           0.01           0.04          --
---------------------------------------------------- --------------- -------------- -------------- ---------------
                        OTHER AFTER-TAX ADJUSTMENTS         (0.01)           0.05           0.07           0.05
---------------------------------------------------- --------------- -------------- -------------- ---------------
        NET INCOME AVAILABLE TO COMMON STOCKHOLDERS      $   0.76        $  0.82        $   1.78       $   1.49
---------------------------------------------------- --------------- -------------- -------------- ---------------
 WEIGHTED-AVERAGE DILUTED COMMON SHARES OUTSTANDING        276.2           291.4          279.0          298.2
                                                     --------------- -------------- -------------- ---------------

</TABLE>





*OPERATING  EARNINGS  VERSUS  U.S.  GAAP (GAAP) NET INCOME  AVAILABLE  TO COMMON
STOCKHOLDERS
Management   uses  operating   earnings,   which  excludes  the  effect  of  net
realized/unrealized  capital gains and losses, as adjusted,  and other after-tax
adjustments, for goal setting, determining employee compensation, and evaluating
performance  on a basis  comparable  to that used by  investors  and  securities
analysts.  Segment operating  earnings are determined by adjusting U.S. GAAP net
income  available to common  stockholders  for net  realized/unrealized  capital
gains and losses,  as adjusted,  and other after-tax  adjustments 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,  management  believes the  presentation of
segment  operating  earnings  enhances  the  understanding  of  our  results  of
operations  by  highlighting  earnings  attributable  to  the  normal,   ongoing
operations of the company's businesses.


                                       8
<PAGE>

<TABLE>
<CAPTION>

                         PRINCIPAL FINANCIAL GROUP, INC.
                              RESULTS OF OPERATIONS
                                  (IN MILLIONS)
-----------------------------------------------------------------------------------------------------------------
                                                       THREE MONTHS ENDED                SIX MONTHS ENDED
                                                 ---------------- --------------- --------------- ---------------
                                                     6/30/06         6/30/05         6/30/06         6/30/05
                                                 ---------------- --------------- --------------- ---------------
<S>                                                <C>               <C>             <C>             <C>
Premiums and other considerations                  $   1,104.6       $    948.9      $ 2,146.4       $   1,883.0
Fees and other revenues                                  451.3            405.3          900.1             822.5
Net investment income                                    911.6            836.0        1,763.8           1,629.9
Net realized/unrealized capital gains (losses)           (19.1)            10.2           29.8               8.7
                                                 ---------------- --------------- --------------- ---------------
   TOTAL REVENUES                                      2,448.4          2,200.4        4,840.1           4,344.1
                                                 ---------------- --------------- --------------- ---------------

Benefits, claims, and settlement expenses              1,459.6          1,264.5        2,801.4           2,498.8
Dividends to policyholders                                72.5             72.2          144.4             145.1
Operating expenses                                       619.8            580.8        1,224.2           1,137.7
                                                 ---------------- --------------- --------------- ---------------
   TOTAL EXPENSES                                      2,151.9          1,917.5        4,170.0           3,781.6
                                                 ---------------- --------------- --------------- ---------------

Income from continuing operations before
   income taxes                                          296.5            282.9          670.1             562.5
Income taxes                                              77.7             59.3          157.4             134.0
                                                 ---------------- --------------- --------------- ---------------
Income from continuing operations, net of
   related income taxes                                  218.8            223.6          512.7             428.5

Income from discontinued operations, net of
   related taxes                                          --               15.3           --                15.9
                                                 ---------------- --------------- --------------- ---------------
NET INCOME                                               218.8            238.9          512.7             444.4
Preferred stock dividends                                  8.3             --             16.5             --
                                                 ---------------- --------------- --------------- ---------------
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS        $     210.5       $    238.9      $   496.2       $     444.4

Less:
Net realized/unrealized capital gains
   (losses), as adjusted                                 (12.9)             3.2           12.0              (0.5)
Other after-tax adjustments                               (1.8)            14.7           18.8              14.7
                                                 ---------------- --------------- --------------- ---------------
   OPERATING EARNINGS                              $     225.2       $    221.0      $   465.4       $     430.2
                                                 ================ =============== =============== ===============

                                                              SELECTED BALANCE SHEET STATISTICS

                                                                        PERIOD ENDED
                                                     ------------------------------------------------------------
                                                           06/30/06              12/31/05            06/30/05
                                                     -------------------- --------------------- -----------------
Total assets (in billions)                                 $   131.4            $   127.0            $   117.2
Total common equity (in millions)                          $ 6,302.7            $ 7,265.2            $ 7,310.1
Total common equity excluding accumulated other
   comprehensive income (in millions)                      $ 6,084.2            $ 6,270.4            $ 5,856.2
End of period common shares outstanding
   (in millions)                                               269.1                280.6                279.4
Book value per common share                                $    23.42           $    25.89           $    26.16
Book value per common share excluding
   accumulated other comprehensive income                  $    22.61           $    22.35           $    20.96

</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               SIX MONTHS ENDED
                                                          -----------------------------  --------------------------------
                                                                  6/30/06       6/30/05          6/30/06        6/30/05
                                                          --------------- -------------- --------------- ----------------
<S>                                                                <C>             <C>             <C>             <C>
DILUTED EARNINGS PER COMMON SHARE:
Operating Earnings                                                 0.82            0.76            1.67            1.44
Net realized/unrealized capital gains (losses)                    (0.05)           0.01            0.04            -
Other after-tax adjustments                                       (0.01)           0.05            0.07            0.05
                                                          --------------- -------------- --------------- ----------------
Net income available to common stockholders                        0.76            0.82            1.78            1.49
                                                          =============== ============== =============== ================

BOOK VALUE PER COMMON SHARE EXCLUDING ACCUMULATED OTHER
COMPREHENSIVE INCOME:
Book value per common share excluding accumulated other
     comprehensive income                                         22.61           20.96           22.61           20.96
Net unrealized capital gains                                       1.05            5.46            1.05            5.46
Foreign currency translation                                      (0.20)          (0.24)          (0.20)          (0.24)
Minimum pension liability                                         (0.04)          (0.02)          (0.04)          (0.02)
                                                          --------------- -------------- --------------- ----------------
Book value per common share including accumulated other
     comprehensive income                                         23.42           26.16           23.42           26.16
                                                          =============== ============== =============== ================
OPERATING REVENUES:
USAMA                                                          1,116.2           971.1         2,166.0         1,928.4
IAMA                                                             164.2           158.2           307.6           291.0
Life and Health                                                1,183.1         1,089.5         2,342.7         2,158.1
Corporate and Other                                                3.8           (28.0)           (5.9)          (38.1)
                                                          --------------- -------------- --------------- ----------------
Total operating revenues                                       2,467.3         2,190.8         4,810.4         4,339.4
Add:  Net realized/unrealized capital gains (losses)
     and related fee adjustments                                 (18.9)           10.6            29.7             6.6
Less:  Operating revenues from discontinued real estate            -               1.0             -               1.9
                                                          --------------- -------------- --------------- ----------------
Total GAAP revenues                                            2,448.4         2,200.4         4,840.1         4,344.1
                                                          =============== ============== =============== ================

OPERATING EARNINGS:
USAMA                                                            151.2           130.5           309.0           269.1
IAMA                                                              16.1            19.1            33.7            28.6
Life and Health                                                   65.2            76.3           135.6           145.8
Corporate and Other                                               (7.3)           (4.9)          (12.9)          (13.3)
                                                          --------------- -------------- --------------- ----------------
Total operating earnings                                         225.2           221.0           465.4           430.2
Net realized/unrealized capital gains (losses)                   (12.9)            3.2            12.0            (0.5)
Other after-tax adjustments                                       (1.8)           14.7            18.8            14.7
                                                          --------------- -------------- --------------- ----------------
Net income available to common stockholders                      210.5           238.9           496.2           444.4
                                                          =============== ============== =============== ================

NET REALIZED/UNREALIZED CAPITAL GAINS (LOSSES):
Net realized/unrealized capital gains (losses), as               (12.9)            3.2            12.0            (0.5)
   adjusted
Add:
Amortization of DPAC and sale inducement costs                     0.6             4.4             1.2             3.9
Capital gains (losses) distributed                                 -              (0.2)            3.6             1.2
Tax impacts                                                       (4.8)            3.0            11.1             1.8
Minority interest capital gains (losses)                          (1.8)            0.2             1.8             0.2
Less related fee adjustments:
Unearned front-end fee income                                      0.5             1.4             1.1             1.8
Certain market value adjustments to fee revenues                  (0.3)           (1.0)           (1.2)           (3.9)
                                                          --------------- -------------- --------------- ----------------
GAAP net realized/unrealized capital gains (losses)              (19.1)           10.2            29.8             8.7
                                                          =============== ============== =============== ================

OTHER AFTER TAX ADJUSTMENTS:
IRS Audit Issue                                                   (1.8)            -              18.8             -
Gain on disposal of discontinued real estate investments           -              14.7             -              14.7
                                                          --------------- -------------- --------------- ----------------
Total other after-tax adjustments                                 (1.8)           14.7            18.8            14.7
                                                          =============== ============== =============== ================
</TABLE>


                                       10
<PAGE>

-------------
(1)  Use of non-GAAP  financial  measures is  discussed  in this  release  after
     Segment Highlights.
(2)  In third quarter 2005, Principal  International  increased ownership is its
     Malaysian joint venture (JV). As a result,  AUM of $1.8 billion is included
     in total AUM as of September  30, 2005.  The increase in AUM above is on an
     organic basis, and excludes the AUM associated with increased JV ownership.
(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 June 30, 2006




                                       11
<PAGE>
[{"type": "8-K", "sequence": "1", "filename": "secondq06er.txt", "description": "FORM 8-K", "secsgml_size_bytes": 35768}]
{"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": "06992754"}, "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: JULY 31, 2006
                        (Date of earliest event reported)

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

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

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

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

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

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

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

On July 31, 2006, Principal Financial Group, Inc. publicly announced information
regarding  its results of  operations  and  financial  condition for the quarter
ended June 30,  2006.  The text of the  announcement  is  included  herewith  as
Exhibit 99.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

99    Second Quarter 2006 Earnings Release

                                    SIGNATURE

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

                                    PRINCIPAL FINANCIAL GROUP, INC.

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

Date:    August 1, 2006

                                       2
Exhibit 99

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

       PRINCIPAL FINANCIAL GROUP, INC. REPORTS SECOND QUARTER 2006 RESULTS

Des Moines,  IA (July 31, 2006) - Principal  Financial Group,  Inc. (NYSE:  PFG)
today announced net income available to common stockholders for the three months
ended June 30, 2006, of $210.5  million,  or $0.76 per diluted share compared to
net income  available to common  stockholders  of $238.9  million,  or $0.82 per
diluted  share for the three months ended June 30,  2005.  The company  reported
operating earnings of $225.2 million for second quarter 2006, compared to $221.0
million for second quarter 2005.  Operating earnings per diluted share (EPS) for
second  quarter  2006 were $0.82  compared to $0.76 for the same period in 2005.
Operating  revenues for second  quarter 2006 were $2,467.3  million  compared to
$2,190.8 million for the same period last year.(1)

"At $225  million of operating  earnings,  the June quarter was one of our best,
second  only to our  record  first  quarter  2006  performance,"  said J.  Barry
Griswell,  chairman and chief executive officer. "Through mid-year, EPS is up 16
percent,  an extremely  strong result as we continue to effectively  execute our
growth strategy and manage our capital."

"In spite of second quarter equity market  declines,  U.S. Asset  Management and
Accumulation earnings were up 16 percent from a year ago, driven by double-digit
earnings growth from full service  accumulation  and individual  annuities,  and
record earnings and 50-plus percent  improvement from Principal Global Investors
and mutual funds," said Griswell.  "Reflecting  significant underlying growth in
account values and assets under  management  (AUM),  U.S.  Asset  Management and
Accumulation earnings were up 15 percent, and International Asset Management and
Accumulation  earnings  were up 18  percent,  combining  for 74 percent of total
company earnings through six months."

"From a year ago, account values in our U.S. asset  accumulation  businesses are
up 14 percent,  or nearly $16 billion.  Principal Global  Investors' third party
institutional  assets under  management  are up $8 billion,  or 20 percent,  and
Principal  International's  AUM is up nearly $3 billion, or 23 percent,(2)" said
Griswell.  "These gains reflect the  competitive  strength of our retirement and
income management offerings, strong investment performance from Principal Global
Investors, and our ongoing focus on distribution and customer satisfaction."

                                       3
Additional highlights as of June 30, 2006:

o    Record total company assets under management of $206.0 billion, an increase
     of $24.7 billion, or 14 percent compared to June 30, 2005.
o    Continued  strong  organic  sales  of  the  company's  key  retirement  and
     investment  products.  Through six months: full service  accumulation sales
     were $4.0 billion,  up 57 percent ($1.1 billion of sales in second  quarter
     2006); mutual fund sales were $2.0 billion,  up 20 percent;  and individual
     annuity sales were $1.2 billion, up 13 percent.
o    Record  operating  revenues of $1.2 billion in second  quarter 2006 for the
     Life and Health Insurance  segment,  a seventh  consecutive record quarter,
     driven by record revenues from the Health and Specialty Benefits divisions.
     Specialty  Benefits  also  delivered  record  operating  earnings  of $25.7
     million in the second quarter, up 21 percent from the prior year period.

                               SEGMENT HIGHLIGHTS

U.S. ASSET MANAGEMENT AND ACCUMULATION
Segment operating earnings for second quarter 2006 were $151.2 million, compared
to $130.5  million  for the same  period  in 2005.  Principal  Global  Investors
generated  record  earnings  for the  quarter  of $24.1  million,  a 51  percent
increase,   reflecting   management  fee  growth  in  all  lines.  Full  service
accumulation  earnings  improved 12 percent to $69.6 million in second  quarter,
primarily the result of increased fees  generated  from higher  account  values.
Full service  accumulation account values were $82.4 billion as of June 30, 2006
compared to $71.0 billion as of June 30, 2005.

Operating  revenues  for the second  quarter  increased  15 percent to  $1,116.2
million  compared to $971.1  million  for the same  period in 2005,  as revenues
increased in all  businesses  within the segment.  Higher  single  premium group
annuities  sales  were the  largest  single  contributor  to the  increase.  The
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,  segment  revenues  increased nine percent,
primarily due to record  revenues in the full service  accumulation,  individual
annuities and mutual funds businesses.

Segment assets under management continued to increase,  reaching a record $174.9
billion as of June 30, 2006,  up 13 percent  from $154.8  billion as of June 30,
2005.

INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION
Segment  operating  earnings for second  quarter 2006 were $16.1  million.  This
compares to second quarter 2005 earnings of $19.1 million. On a comparable basis
earnings  improved from a year ago,  excluding high inflation linked  investment
yields in Chile and a tax benefit associated with the American Jobs Creation Act
in second  quarter  2005.

Operating  revenues were $164.2  million for second  quarter  2006,  compared to
$158.2 million for the same period last year, as favorable currency  translation
in Chile  and  Brazil  was  partially  offset by lower  sales of single  premium
annuities with life contingencies in Mexico and Chile.

Assets under  management for the segment were $16.3 billion as of June 30, 2006,
compared to $11.8 billion as of June 30, 2005.

                                       4
LIFE AND HEALTH INSURANCE
Segment operating earnings for second quarter 2006 were $65.2 million.  Compared
to the year ago quarter, higher earnings in the Specialty Benefits division, due
to solid growth and a $3.4 million benefit from a long-term  disability  reserve
refinement,  were more than offset by lower earnings in the Individual  Life and
Health divisions.  Second quarter 2005 earnings of $76.3 million included a $6.6
million  benefit in the  Individual  Life division,  primarily from  methodology
improvements related to reinsurance values, as well as better than normal claims
experience in the group  disability and insured  medical lines.  Individual life
earnings also  declined  from a year ago due to higher claims in second  quarter
2006.

For the  seventh  consecutive  quarter the segment  generated  record  operating
revenues,  an increase  of nine  percent  from the same  period in 2005.  The 16
percent increase in Specialty  Benefits  revenues was driven by strong sales and
steady  retention  in each of the  Specialty  Benefits  lines.  Health  revenues
increased  11  percent,  primarily  due to a nine  percent  increase  in insured
medical covered members.  Individual Life revenues  decreased  slightly,  as the
company continued its shift in marketing emphasis from traditional premium-based
products to fee-based  universal  life and  variable  universal  life  products.
Unlike traditional premium-based products, universal life and variable universal
life deposits are not reported as GAAP revenue.

CORPORATE AND OTHER
Operating  losses  for  second  quarter  2006 were  $7.3  million,  compared  to
operating  losses of $4.9 million for the same period in 2005.  Higher losses in
second quarter 2006 reflect the second  quarter 2006  declaration of a preferred
stock  dividend,  the cost of which reduced segment  operating  earnings by $8.3
million, with no corresponding activity in the second quarter 2005. The earnings
impact of this item was substantially offset by $5.4 million of higher operating
earnings from joint venture real estate activity in second quarter 2006 compared
to second quarter 2005.

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

                                       5
USE OF NON-GAAP FINANCIAL MEASURES
The  company  uses a number  of  non-GAAP  financial  measures  that  management
believes are useful to investors  because they  illustrate  the  performance  of
normal,  ongoing operations,  which is important in understanding and evaluating
the  company's  financial  condition  and results of  operations.  They are not,
however, a substitute for U.S. GAAP financial measures.  Therefore,  the company
has  provided  reconciliations  of the  non-GAAP  measures to the most  directly
comparable U.S. GAAP measure at the end of the release. The company adjusts U.S.
GAAP measures for items not directly related to ongoing operations.  However, it
is possible these  adjusting  items have occurred in the past and could recur in
the future. Management also uses non-GAAP measures for goal setting, determining
employee  and  senior  management   awards  and  compensation,   and  evaluating
performance  on a basis  comparable  to that used by  investors  and  securities
analysts.

SHARE REPURCHASES
In May 2006,  the company  completed the $250 million share  repurchase  program
authorized  by the Board in  November  2005.  Under this  program,  the  company
repurchased 5.1 million common shares for a cost of $250.0 million.  Also in May
2006,  following  the  Board's  share  repurchase  authorization  of up to  $500
million,  the  company  entered  into an  accelerated  common  stock  repurchase
agreement with an investment bank.  Under this agreement,  the company paid $500
million and received an initial  delivery of  approximately  7.7 million  common
shares,  while retaining the right to receive additional common shares depending
on the volume  weighted  average share price of the company's  common stock over
the  program's  execution  period.  The program is expected to be  completed  in
fourth quarter 2006, at which time the company will receive any remaining common
shares owed to it under the agreement.

EARNINGS CONFERENCE CALL
At 9:00 A.M.  (CDT)  tomorrow,  Chairman and CEO J. Barry Griswell and Executive
Vice  President  and CFO  Mike  Gersie  will  lead a  discussion  during  a live
conference call. Parties interested in listening to the conference call live may
access  the  webcast  on  the   company's   Investor   Relations   (IR)  website
(www.principal.com/investor)  or by dialing  (800)  374-1609  (U.S.  callers) or
(706) 643-7701  (International  callers)  approximately  10 minutes prior to the
start of the call.  To access the call,  leader name is Tom Graf.  Listeners can
access  an audio  replay  of the call on the IR  website,  or by  calling  (800)
642-1687 (US callers) or (706) 645-9291 (International callers). The access code
for the replay is 2068246. Replays will be available through August 8, 2006. The
financial  supplement is currently  available on our website and may be referred
to during the conference call.

                                       6
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 $206.0
billion in assets under  management(4)  and serves some 16.3  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 (LOSS)* IN MILLIONS
                                                     ------------------------------ ------------------------------
                                                          THREE MONTHS ENDED,             SIX MONTHS ENDED,
SEGMENT     6/30/06         6/30/05        6/30/06        6/30/05
---------------------------------------------------- --------------- -------------- -------------- ---------------
             U.S. ASSET MANAGEMENT AND ACCUMULATION       $151.2           $130.5         $309.0          $269.1
---------------------------------------------------- --------------- -------------- -------------- ---------------
    INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION         16.1             19.1           33.7            28.6
---------------------------------------------------- --------------- -------------- -------------- ---------------
                          LIFE AND HEALTH INSURANCE         65.2             76.3          135.6           145.8
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                CORPORATE AND OTHER         (7.3)            (4.9)         (12.9)          (13.3)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                 OPERATING EARNINGS        225.2            221.0          465.4           430.2
---------------------------------------------------- --------------- -------------- -------------- ---------------
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS (LOSSES), AS ADJUSTED        (12.9)             3.2           12.0            (0.5)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                        OTHER AFTER-TAX ADJUSTMENTS         (1.8)            14.7           18.8            14.7
---------------------------------------------------- --------------- -------------- -------------- ---------------
        NET INCOME AVAILABLE TO COMMON STOCKHOLDERS       $210.5           $238.9         $496.2          $444.4
---------------------------------------------------- --------------- -------------- -------------- ---------------

                                                                       PER DILUTED SHARE
                                                     ------------------------------ ------------------------------
                                                          THREE MONTHS ENDED,            SIX MONTHS ENDED,
                                                     --------------- -------------- -------------- ---------------
                                                        6/30/06         6/30/05        6/30/06        6/30/05
                                                     --------------- -------------- -------------- ---------------
                                 OPERATING EARNINGS      $   0.82        $   0.76       $   1.67       $   1.44
---------------------------------------------------- --------------- -------------- -------------- ---------------
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS (LOSSES), AS ADJUSTED         (0.05)           0.01           0.04          --
---------------------------------------------------- --------------- -------------- -------------- ---------------
                        OTHER AFTER-TAX ADJUSTMENTS         (0.01)           0.05           0.07           0.05
---------------------------------------------------- --------------- -------------- -------------- ---------------
        NET INCOME AVAILABLE TO COMMON STOCKHOLDERS      $   0.76        $  0.82        $   1.78       $   1.49
---------------------------------------------------- --------------- -------------- -------------- ---------------
 WEIGHTED-AVERAGE DILUTED COMMON SHARES OUTSTANDING        276.2           291.4          279.0          298.2
                                                     --------------- -------------- -------------- ---------------
*OPERATING  EARNINGS  VERSUS  U.S.  GAAP (GAAP) NET INCOME  AVAILABLE  TO COMMON
STOCKHOLDERS
Management   uses  operating   earnings,   which  excludes  the  effect  of  net
realized/unrealized  capital gains and losses, as adjusted,  and other after-tax
adjustments, for goal setting, determining employee compensation, and evaluating
performance  on a basis  comparable  to that used by  investors  and  securities
analysts.  Segment operating  earnings are determined by adjusting U.S. GAAP net
income  available to common  stockholders  for net  realized/unrealized  capital
gains and losses,  as adjusted,  and other after-tax  adjustments 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,  management  believes the  presentation of
segment  operating  earnings  enhances  the  understanding  of  our  results  of
operations  by  highlighting  earnings  attributable  to  the  normal,   ongoing
operations of the company's businesses.

                                       8
PRINCIPAL FINANCIAL GROUP, INC.
                              RESULTS OF OPERATIONS
                                  (IN MILLIONS)
-----------------------------------------------------------------------------------------------------------------
                                                       THREE MONTHS ENDED                SIX MONTHS ENDED
                                                 ---------------- --------------- --------------- ---------------
                                                     6/30/06         6/30/05         6/30/06         6/30/05
                                                 ---------------- --------------- --------------- ---------------
Premiums and other considerations                  $   1,104.6       $    948.9      $ 2,146.4       $   1,883.0
Fees and other revenues                                  451.3            405.3          900.1             822.5
Net investment income                                    911.6            836.0        1,763.8           1,629.9
Net realized/unrealized capital gains (losses)           (19.1)            10.2           29.8               8.7
                                                 ---------------- --------------- --------------- ---------------
   TOTAL REVENUES                                      2,448.4          2,200.4        4,840.1           4,344.1
                                                 ---------------- --------------- --------------- ---------------

Benefits, claims, and settlement expenses              1,459.6          1,264.5        2,801.4           2,498.8
Dividends to policyholders                                72.5             72.2          144.4             145.1
Operating expenses                                       619.8            580.8        1,224.2           1,137.7
                                                 ---------------- --------------- --------------- ---------------
   TOTAL EXPENSES                                      2,151.9          1,917.5        4,170.0           3,781.6
                                                 ---------------- --------------- --------------- ---------------

Income from continuing operations before
   income taxes                                          296.5            282.9          670.1             562.5
Income taxes                                              77.7             59.3          157.4             134.0
                                                 ---------------- --------------- --------------- ---------------
Income from continuing operations, net of
   related income taxes                                  218.8            223.6          512.7             428.5

Income from discontinued operations, net of
   related taxes                                          --               15.3           --                15.9
                                                 ---------------- --------------- --------------- ---------------
NET INCOME                                               218.8            238.9          512.7             444.4
Preferred stock dividends                                  8.3             --             16.5             --
                                                 ---------------- --------------- --------------- ---------------
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS        $     210.5       $    238.9      $   496.2       $     444.4

Less:
Net realized/unrealized capital gains
   (losses), as adjusted                                 (12.9)             3.2           12.0              (0.5)
Other after-tax adjustments                               (1.8)            14.7           18.8              14.7
                                                 ---------------- --------------- --------------- ---------------
   OPERATING EARNINGS                              $     225.2       $    221.0      $   465.4       $     430.2
                                                 ================ =============== =============== ===============

                                                              SELECTED BALANCE SHEET STATISTICS

                                                                        PERIOD ENDED
                                                     ------------------------------------------------------------
                                                           06/30/06              12/31/05            06/30/05
                                                     -------------------- --------------------- -----------------
Total assets (in billions)                                 $   131.4            $   127.0            $   117.2
Total common equity (in millions)                          $ 6,302.7            $ 7,265.2            $ 7,310.1
Total common equity excluding accumulated other
   comprehensive income (in millions)                      $ 6,084.2            $ 6,270.4            $ 5,856.2
End of period common shares outstanding
   (in millions)                                               269.1                280.6                279.4
Book value per common share                                $    23.42           $    25.89           $    26.16
Book value per common share excluding
   accumulated other comprehensive income                  $    22.61           $    22.35           $    20.96
9
PRINCIPAL FINANCIAL GROUP, INC.
           RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO U.S. GAAP
                       (IN MILLIONS, EXCEPT AS INDICATED)

                                                               THREE MONTHS ENDED               SIX MONTHS ENDED
                                                          -----------------------------  --------------------------------
                                                                  6/30/06       6/30/05          6/30/06        6/30/05
                                                          --------------- -------------- --------------- ----------------
DILUTED EARNINGS PER COMMON SHARE:
Operating Earnings                                                 0.82            0.76            1.67            1.44
Net realized/unrealized capital gains (losses)                    (0.05)           0.01            0.04            -
Other after-tax adjustments                                       (0.01)           0.05            0.07            0.05
                                                          --------------- -------------- --------------- ----------------
Net income available to common stockholders                        0.76            0.82            1.78            1.49
                                                          =============== ============== =============== ================

BOOK VALUE PER COMMON SHARE EXCLUDING ACCUMULATED OTHER
COMPREHENSIVE INCOME:
Book value per common share excluding accumulated other
     comprehensive income                                         22.61           20.96           22.61           20.96
Net unrealized capital gains                                       1.05            5.46            1.05            5.46
Foreign currency translation                                      (0.20)          (0.24)          (0.20)          (0.24)
Minimum pension liability                                         (0.04)          (0.02)          (0.04)          (0.02)
                                                          --------------- -------------- --------------- ----------------
Book value per common share including accumulated other
     comprehensive income                                         23.42           26.16           23.42           26.16
                                                          =============== ============== =============== ================
OPERATING REVENUES:
USAMA                                                          1,116.2           971.1         2,166.0         1,928.4
IAMA                                                             164.2           158.2           307.6           291.0
Life and Health                                                1,183.1         1,089.5         2,342.7         2,158.1
Corporate and Other                                                3.8           (28.0)           (5.9)          (38.1)
                                                          --------------- -------------- --------------- ----------------
Total operating revenues                                       2,467.3         2,190.8         4,810.4         4,339.4
Add:  Net realized/unrealized capital gains (losses)
     and related fee adjustments                                 (18.9)           10.6            29.7             6.6
Less:  Operating revenues from discontinued real estate            -               1.0             -               1.9
                                                          --------------- -------------- --------------- ----------------
Total GAAP revenues                                            2,448.4         2,200.4         4,840.1         4,344.1
                                                          =============== ============== =============== ================

OPERATING EARNINGS:
USAMA                                                            151.2           130.5           309.0           269.1
IAMA                                                              16.1            19.1            33.7            28.6
Life and Health                                                   65.2            76.3           135.6           145.8
Corporate and Other                                               (7.3)           (4.9)          (12.9)          (13.3)
                                                          --------------- -------------- --------------- ----------------
Total operating earnings                                         225.2           221.0           465.4           430.2
Net realized/unrealized capital gains (losses)                   (12.9)            3.2            12.0            (0.5)
Other after-tax adjustments                                       (1.8)           14.7            18.8            14.7
                                                          --------------- -------------- --------------- ----------------
Net income available to common stockholders                      210.5           238.9           496.2           444.4
                                                          =============== ============== =============== ================

NET REALIZED/UNREALIZED CAPITAL GAINS (LOSSES):
Net realized/unrealized capital gains (losses), as               (12.9)            3.2            12.0            (0.5)
   adjusted
Add:
Amortization of DPAC and sale inducement costs                     0.6             4.4             1.2             3.9
Capital gains (losses) distributed                                 -              (0.2)            3.6             1.2
Tax impacts                                                       (4.8)            3.0            11.1             1.8
Minority interest capital gains (losses)                          (1.8)            0.2             1.8             0.2
Less related fee adjustments:
Unearned front-end fee income                                      0.5             1.4             1.1             1.8
Certain market value adjustments to fee revenues                  (0.3)           (1.0)           (1.2)           (3.9)
                                                          --------------- -------------- --------------- ----------------
GAAP net realized/unrealized capital gains (losses)              (19.1)           10.2            29.8             8.7
                                                          =============== ============== =============== ================

OTHER AFTER TAX ADJUSTMENTS:
IRS Audit Issue                                                   (1.8)            -              18.8             -
Gain on disposal of discontinued real estate investments           -              14.7             -              14.7
                                                          --------------- -------------- --------------- ----------------
Total other after-tax adjustments                                 (1.8)           14.7            18.8            14.7
                                                          =============== ============== =============== ================
10
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(1)  Use of non-GAAP  financial  measures is  discussed  in this  release  after
     Segment Highlights.
(2)  In third quarter 2005, Principal  International  increased ownership is its
     Malaysian joint venture (JV). As a result,  AUM of $1.8 billion is included
     in total AUM as of September  30, 2005.  The increase in AUM above is on an
     organic basis, and excludes the AUM associated with increased JV ownership.
(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 June 30, 2006

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