SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                    FORM 8-K

                                 CURRENT REPORT

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

                        Date of Report: NOVEMBER 3, 2003
                        (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)

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

ITEM 7.  EXHIBITS

99.1    Third Quarter 2003 Earnings Release

ITEM 12.  RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On  November  3,  2003,  Principal  Financial  Group,  Inc.  publicly  announced
information  regarding its results of operations and financial condition for the
quarter  ended  September  30, 2003.  The text of the  announcement  is included
herewith as Exhibit 99.1.

                                    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 3, 2003

                                       2

                                                                    Exhibit 99.1

RELEASE: On receipt   11/3/2003
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 2003 RESULTS

Des Moines, IA (November 3, 2003) -- Principal Financial Group, Inc. (NYSE: PFG)
today  announced  quarterly net income for the three months ended  September 30,
2003, of $216.3  million,  or $0.67 per diluted share  compared to a net loss of
$158.4  million,  or  $(0.45)  per  diluted  share  for the three  months  ended
September 30, 2002. The company  reported  operating  earnings of $204.3 million
for third  quarter  2003,  up 1 percent  compared  to $202.5  million  for third
quarter  2002.  Operating  earnings  per diluted  share for third  quarter  2003
increased  9 percent  to $0.63  compared  to $0.58 for the same  period in 2002.
Operating  revenues  for third  quarter  2003 were  $2,271.0  million,  up $37.5
million compared to the same period last year.1

         "The  Principal  continues  to  benefit  from our  focus  on small  and
medium-sized  businesses,  and from our diversified earnings mix," said J. Barry
Griswell,  chairman,  president and chief executive officer. "We've delivered 30
percent  earnings  per share  growth  since  our IPO in  October  2001,  despite
declining equity markets and a weak economy over that period."

         "With signs of an economic recovery, and real improvement in the equity
markets,  we're  again  seeing the true  potential  of our  retirement  services
businesses.  U.S. Asset Management and Accumulation  achieved record earnings --
up 30  percent  compared  to a year ago,  reflecting  a 24 percent  increase  in
pension earnings,  as well as triple-digit earnings growth from mutual funds and
individual  annuities,  and double-digit growth for Principal Global Investors,"
said Griswell.  "This helped drive our nine percent  improvement in earnings per
share  compared to a year ago,  and  contributed  to our 20 percent  improvement
year-to-date.
         "A number of other leading indicators also point to the strength of our
position  going  forward,"  said  Griswell.

o    Pension account values reached a record $72.5 billion,  led by a 28% or $11
     billion increase for full-service accumulation

o    Net cash flow from the U.S. asset accumulation  businesses is up 53 percent
     year-to-date  to $4.9 billion,  which  translates  into nearly 7 percent of
     beginning of year account value; and

o    Sales of key  retirement  and  investment  products  continue to be strong,
     totaling $9.7 billion  year-to-date,  with double-digit  growth for pension
     full  service   accumulation,   mutual  funds,   individual  annuities  and
     Institutional   GICs/Funding   agreements.   Third   quarter  full  service
     accumulation  sales were $1.2  billion,  up 26 percent from second  quarter
     2003.

                                       3

         "While U.S. asset  accumulation  net cash flow declined to $0.6 billion
in the third quarter,  from $1 billion a year ago, this reflects net outflows of
$417 million in our Institutional  GIC/Funding  agreement  business,  as several
large  contracts  matured  right  at the  end of the  quarter,"  said  Griswell.
"Importantly,  pension  full service  accumulation  net cash flow was very solid
during the quarter at $0.8  billion.  Further,  our retention of at risk pension
assets continued to be outstanding, at 58 percent for the month of September and
55 percent for the third quarter," said Griswell.

         Assets under  management  were $134.8 billion as of September 30, 2003,
an increase of $6.8  billion,  or 5 percent  compared to June 30,  2003,  and an
increase of $17.4 billion,  or 15 percent  compared to September 30, 2002.  (The
sale of substantially  all of BT Financial Group closed in the fourth quarter of
2002. Therefore, BT's assets under management are included for the period ending
September  30, 2002.  Excluding  BT,  assets under  management  increased  $30.0
billion, or 29 percent, compared to September 30, 2002.)

For the nine months ended September 30, 2003:

o    Net  income  increased  to  $574.2  million,  or $1.75 per  diluted  share,
     compared to a net loss of $73.1  million,  or $(0.21)  per  diluted  share,
     during  the same  period a year  ago.  Net loss for the nine  months  ended
     September  30, 2002,  includes an after-tax  goodwill  write-down of $280.9
     million  ($255.4  million  related  to BT  Financial  Group)  and a loss on
     discontinued operations of BT Financial Group ($194.9 million).

o    Operating  earnings  increased  11 percent to $632.7  million,  compared to
     $571.5 million in the year earlier period.

o    Operating  earnings  per diluted  share  increased  20 percent to $1.93 per
     diluted  share  compared  to $1.61 per  diluted  share in the year  earlier
     period.

o    Operating  revenues  increased 4 percent to $7,080.0  million from $6,799.4
     million during the same period a year ago.

                               SEGMENT HIGHLIGHTS

U.S. ASSET MANAGEMENT AND ACCUMULATION
         Segment operating  earnings for third quarter 2003 were a record $110.5
million,  compared to $84.9 million for the same period in 2002. The improvement
was  driven  by record  operating  earnings  in the  pension  business  of $87.3
million, a 24 percent increase compared to the same period a year ago.

         Operating  revenues for the third quarter  increased to $871.9  million
compared to $865.9 million for the same period in 2002.  This increase  occurred
despite a $33.0 million decrease in sales of single premium group annuities. The
single premium  product,  which is typically  used to fund defined  benefit plan
terminations,  can generate  large  premiums  from a few customers and therefore
tends to vary from period to period.  Excluding  this product,  revenues for the
segment increased 5 percent.

         Segment  assets under  management  continued  to  increase,  reaching a
record $110.4 billion as of September 30, 2003, up 3 percent from $107.6 billion
as of June 30, 2003,  and up 29 percent from $85.4  billion as of September  30,
2002.

                                       4

INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION
         Segment  operating  earnings for third  quarter 2003 were $8.0 million,
compared to $5.0  million for the same  period in 2002.  (For the quarter  ended
September  30,  2002,  segment  results  include a loss of $0.8  million  for BT
Financial  Group.2)  Principal  International,  which  consists of the company's
asset  accumulation  businesses  outside the U.S.,  had third quarter  operating
earnings of $8.0 million,  compared to $5.8 million for the same period in 2002.
Principal  International's earnings growth primarily reflects increased earnings
from its Brazil operations.

         Operating revenues for the segment were $99.9 million for third quarter
2003, compared to $82.8 million for the same period last year.

         Assets  under  management  for the  segment  were  $6.9  billion  as of
September 30, 2003,  compared to $5.8 billion as of June 30, 2003,  and compared
to $19.8 billion as of September  30, 2002. A $15.6 billion  decrease from third
quarter 2002 is  attributable to the sale of  substantially  all of BT Financial
Group. Assets under management for Principal  International increased 64 percent
from September 30, 2002.

LIFE AND HEALTH INSURANCE
         Operating earnings for third quarter 2003 were $52.8 million,  compared
to $55.7  million for the same period in 2002.  The decline in segment  earnings
primarily reflects lower individual life sales during the quarter.

         Operating  revenues  increased  to  $995.7  million  for  the  quarter,
compared to $987.7  million for the same period in 2002,  largely as a result of
increases within the disability  insurance  operations.  Operating revenues were
down  slightly  in the life  business,  as the  company  has  shifted  marketing
emphasis in recent years 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 is
not reported as GAAP revenue.  Operating revenues were up slightly in the health
business  due to rate  increases  and the change in  accounting  treatment  of a
reinsurance contract, which was largely offset by the decline in members.

MORTGAGE BANKING
         Operating  earnings for third quarter 2003 were $29.2 million  compared
to a record $62.5 million for the same period in 2002. Mortgage banking earnings
are generated  from loan  production  and loan  servicing.  Despite  record loan
production volumes in the third quarter 2003,  production  earnings decreased to
$40.3  million,  compared to a record $69.2 million for the same period in 2002.
The  decline in  production  earnings is due to  decreased  gains on the sale of
mortgage loans, reflecting rising interest rates and greater pricing competition
for new loan  applications.  Servicing  generated a loss of $11.1 million during
the quarter, compared to a loss of $6.7 million for the same period in 2002. The
third quarter 2003 loss from servicing reflects: a $20.3 million loss from model
refinements  impacting the mortgage servicing rights valuation;  $6.3 million of

                                       5

earnings  from  servicing  operations;  and a $2.9  million  gain from  mortgage
servicing rights valuation adjustment (net of hedges).

         Mortgage  loan  production  was a record  $18.1  billion  in the  third
quarter 2003  compared to $11.1  billion in the year earlier  period.  At $117.8
billion as of September 30, 2003, the servicing portfolio continued to grow at a
solid pace during the quarter,  up $2.4 billion from June 30, 2003, and up $15.8
billion compared to September 30, 2002.

         Operating  revenues  decreased  8  percent  to $288.1  million  for the
quarter,  compared to $312.9  million for the same period last year.  Production
revenues  decreased  $44.1  million,  or  27  percent,  and  servicing  revenues
increased $19.3 million, or 13 percent, from the same quarter a year ago.

CORPORATE AND OTHER
         Operating  earnings for third quarter 2003 were $3.8 million,  compared
to operating  losses of $5.6  million for the same period in 2002.  The increase
reflects unusually high earnings associated with the sale of certain real estate
assets in the third quarter 2003.

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, 2002, and in the company's quarterly report on Form 10-Q
for the quarter  ended June 30, 2003,  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.

OUTLOOK FOR FOURTH QUARTER 2003 AND FULL YEAR 2004
Based on estimated net realized  capital losses of $25 million  after-tax in the
fourth quarter, the company expects fourth quarter 2003 net income to range from
$0.52 to $0.55 per diluted share. Based on estimated net realized capital losses
of $65  million  after-tax,  the company  expects  2004 net income to range from
$2.45 to $2.55 per diluted  share.3  The company  expects  fourth  quarter  2003
operating  earnings to range from $0.60 to $0.63 per diluted share.4 The company
expects 2004 operating earnings to range from $2.65 to $2.75 per diluted share.5

SHAREHOLDER DIVIDEND
As  announced on October 24,  2003,  the board of  directors  declared an annual
dividend of $0.45 per share,  payable on December 8, 2003,  to  shareholders  of
record as of November 7, 2003.

                                       6

SHARE REPURCHASES
In May 2003,  the board of directors  authorized  a repurchase  program of up to
$300  million  of our  outstanding  common  stock.  Under  this  program,  as of
September 30, 2003,  the company had  repurchased  2.4 million  shares for $78.0
million, an average price per share of $32.83.

STOCK OPTIONS
As communicated in the third quarter 2002 earnings release,  The Principal began
expensing   employee  stock  options  and  the  employee  stock  purchase  plan,
retroactive  to January 1, 2002.  This resulted in an after-tax  expense of $3.3
million and $10.7  million,  respectively,  for the three and nine months  ended
September 30, 2003, compared to $5.6 million for the three and nine months ended
September 30, 2002.

FIN 46
Effective July 1, 2003, the company  adopted  Financial  Interpretation  No. 46,
CONSOLIDATION  OF VARIABLE  INTEREST  ENTITIES ("FIN 46") for variable  interest
entities ("VIEs") created on or after February 1, 2003. FIN 46 provides guidance
related to identifying  variable interest entities and determining  whether such
entities should be consolidated.  For VIEs created or acquired prior to February
1, 2003, FASB Staff Position FIN 46-6 "EFFECTIVE DATE OF FASB INTERPRETATION NO.
46,  CONSOLIDATION OF VARIABLE INTEREST  ENTITIES" allows the deferral of FIN 46
until the end of the first interim or annual  period  ending after  December 15,
2003,  if  certain  conditions  are met.  We have  elected  to early  adopt  the
provisions of FIN 46 for all VIEs effective July 1, 2003. The transition to this
new requirement  resulted in a loss, reported as cumulative change in accounting
principle,  of $2.2 million as of September 30, 2003. In addition,  the guidance
resulted in an increase in assets and  liabilities  of $3.7  billion  within the
company's consolidated statement of financial position.

EARNINGS CONFERENCE CALL
At 9:00 A.M. (CST) tomorrow,  Chairman,  President and CEO J. Barry Griswell and
Executive  Vice  President  and CFO Mike Gersie will lead a discussion  during a
live  conference  call.  Parties  interested in listening to the conference call
live may access the webcast on the Principal  Financial Group Investor Relations
(IR) website  (www.principal.com/investor)  or by dialing (800)  374-1609  (U.S.
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 3101314.  Replays  will be  available  through
November 11,  2003.  The  financial  supplement  is  currently  available on our
website and will be referred to during the conference call.

ABOUT THE PRINCIPAL FINANCIAL GROUP
The Principal  Financial  Group(R) (The Principal  (R))6 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 mortgage  banking  through its diverse family of financial
services  companies.  More employers  choose the Principal  Financial  Group for
their 401(k) plans than any other bank, mutual fund, or insurance company in the
United States7.  A member of the Fortune 500, the Principal  Financial Group has
$134.8  billion  in assets  under  management8  and  serves  some  14.8  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,            NINE MONTHS ENDED,
                                                      --------------------------         ---------------------

                 SEGMENT                                9/30/03         9/30/02        9/30/03        9/30/02
- ----------------------------------------------------  --------------- -------------- -------------- ---------------
             U.S. ASSET MANAGEMENT AND ACCUMULATION      $110.5          $ 84.9         $316.2         $ 287.2
- ----------------------------------------------------  --------------- -------------- --------------  --------------
    INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION
                                                            8.0             5.0           26.7            10.1
- ----------------------------------------------------  --------------- -------------- --------------  --------------
                          LIFE AND HEALTH INSURANCE        52.8            55.7          174.8           171.7
- ----------------------------------------------------  --------------- -------------- --------------  --------------
                                    MORTGAGE BANKING       29.2            62.5          126.6           113.8
- ----------------------------------------------------  --------------- -------------- --------------  --------------
                                CORPORATE AND OTHER         3.8           (5.6)          (11.6)          (11.3)
- ----------------------------------------------------  --------------- -------------- --------------  --------------
       OPERATING EARNINGS (NET INCOME EXCLUDING NET
                        REALIZED/UNREALIZED CAPITAL
                     GAINS (LOSSES) AS ADJUSTED AND
                       OTHER AFTER-TAX ADJUSTMENTS)       204.3           202.5          632.7           571.5
- ----------------------------------------------------  --------------- -------------- --------------  --------------
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS (LOSSES), AS ADJUSTED         1.8          (146.9)         (67.6)         (153.8)
- ----------------------------------------------------  --------------- -------------- --------------  --------------
                        OTHER AFTER-TAX ADJUSTMENTS        10.2          (214.0)           9.1          (490.8)
- ----------------------------------------------------  ---------------  -------------- --------------  --------------
                                NET INCOME (LOSS)**      $216.3          $158.4)        $574.2         $ (73.1)
- ----------------------------------------------------  --------------- -------------- --------------  --------------

                                                                          PER DILUTED SHARE
- ----------------------------------------------------  ------------------------------ ------------------------------
                                                          THREE MONTHS ENDED,            NINE MONTHS ENDED,
- ----------------------------------------------------  ------------------------------ ------------------------------
                                                        9/30/03         9/30/02        9/30/03        9/30/02
- ----------------------------------------------------  --------------- -------------- --------------  --------------
       OPERATING EARNINGS (NET INCOME EXCLUDING NET
                        REALIZED/UNREALIZED CAPITAL
                     GAINS (LOSSES) AS ADJUSTED AND
                       OTHER AFTER-TAX ADJUSTMENTS)      $  0.63           $0.58        $  1.93        $   1.61
- ----------------------------------------------------  --------------- -------------- --------------  --------------
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS (LOSSES), AS ADJUSTED         0.01           (0.42)         (0.21)          (0.43)
- ----------------------------------------------------  --------------- -------------- --------------  --------------
                        OTHER AFTER-TAX ADJUSTMENTS         0.03           (0.61)          0.03           (1.39)
- ----------------------------------------------------  --------------- -------------- --------------  --------------
                                  NET INCOME (LOSS)      $  0.67         $ (0.45)       $  1.75        $  (0.21)
- ----------------------------------------------------  --------------- -------------- --------------  --------------
        WEIGHTED-AVERAGE DILUTED SHARES OUTSTANDING
                                                          324.1           348.2          327.7           355.3
- ----------------------------------------------------  --------------- -------------- --------------  --------------

*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

** Net income  for the three  months  ended  September  30,  2003  reflects  net
realized/unrealized  capital  gains/(losses)  of $1.8  million,  which  includes
$(19.2) million in credit losses  stemming from  impairments and credit impaired
sales,  as well as $10.2  million  in other  after-tax  adjustments.  The  other
after-tax adjustments reflect a $12.4 million gain from discontinued  operations
and a $(2.2)  million  loss for a  cumulative  change  in  accounting  principle
resulting  from the  adoption of FIN 46. Net income for the three  months  ended
September 30, 2002  reflects net realized  capital  losses of $(146.9)  million,
primarily made up of credit losses stemming from impairments and credit impaired
sales  of  $(64.8)  million  and  the   mark-to-market  of  certain  seed  money
investments $(61.0), as well as $(214.0) million in other after-tax adjustments.
The other  after-tax  adjustments  reflect  a  $(201.0)  loss from  discontinued
operations  and a $(13.0)  million  loss  resulting  from the increase to a loss
contingency reserve established for sales practices litigation.

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

                                                        THREE MONTHS ENDED               NINE MONTHS ENDED
                                                 -------------------------------- -------------------------------
                                                     9/30/03         9/30/02         9/30/03         9/30/02
                                                 ---------------- --------------- --------------- ---------------
                                                                                         
Premiums and other considerations                      $868.8        $  888.7        $2,650.9        $2,941.0
Fees and other revenues                                 525.1           516.6         1,846.1         1,386.7
Net investment income                                   877.9           821.2         2,571.6         2,455.5
Net realized/unrealized capital losses                   (5.7)         (230.6)          (93.3)         (224.0)
                                                 ---------------- --------------- --------------- ---------------
   TOTAL REVENUES                                     2,266.1         1,995.9         6,975.3         6,559.2
                                                 ---------------- --------------- --------------- ---------------
Benefits, claims, and settlement expenses             1,175.7         1,231.6         3,558.7         3,942.7
Dividends to policyholders                               78.7            79.1           232.7           241.0
Operating expenses                                      727.5           640.2         2,392.4         1,832.2
                                                 ---------------- --------------- --------------- ---------------
   TOTAL EXPENSES                                     1,981.9         1,950.9         6,183.8         6,015.9
                                                 ---------------- --------------- --------------- ---------------

Income from continuing operations before
  income taxes                                          284.2            45.0           791.5           543.3
Income taxes                                             78.1             2.4           226.4           140.6
                                                 ---------------- --------------- --------------- ---------------
Income from continuing operations, net of
  related income taxes                                  206.1            42.6           565.1           402.7

Income (loss) from discontinued operations,
  net of taxes                                           12.4          (201.0)           11.3          (194.9)
                                                 ---------------- --------------- --------------- ---------------
Income (loss) before cumulative effect of
  accounting changes                                    218.5          (158.4)          576.4           207.8
Cumulative effect of accounting changes,
  net of related income taxes                            (2.2)             -             (2.2)         (280.9)
                                                 ---------------- --------------- --------------- ---------------
   NET INCOME (LOSS)                                   $216.3        $ (158.4)       $  574.2        $  (73.1)

Less:
Net realized/unrealized capital gains
  (losses), as adjusted                                  1.8           (146.9)          (67.6)         (153.8)
Other after-tax adjustments                              10.2          (214.0)            9.1          (490.8)
                                                 ---------------- --------------- --------------- ---------------
   OPERATING EARNINGS                                  $204.3        $  202.5        $  632.7        $  571.5
                                                 ================ =============== =============== ===============

                        SELECTED BALANCE SHEET STATISTICS

                                                                             PERIOD ENDED
                                                     ------------------------------------------------------------
                                                           9/30/03              12/31/02              9/30/02
                                                     --------------------- -------------------- -----------------
                                                                                           
Total assets (in billions)                             $   103.8               $   89.9             $    88.3
Total equity (in millions)                             $ 7,468.1               $6,657.2             $ 6,634.0
Total equity excluding accumulated other
  comprehensive income (in millions)                   $ 6,265.7               $6,021.4             $ 6,126.1
End of period shares outstanding (in millions)             322.8                  334.4                 343.2
Book value per share                                   $    23.14              $   19.91            $    19.33
Book value per share excluding accumulated other
  comprehensive income                                 $    19.41              $   18.01            $    17.85

                                       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
                                                             -----------------------------   ---------------------------
                                                                    9/30/03        9/30/02       9/30/03       9/30/02
                                                             -------------- --------------   ------------- -------------
                                                                                                      
DILUTED EARNINGS PER SHARE:
Operating Earnings                                                    0.63           0.58           1.93          1.61
Net realized/unrealized capital gains/(losses)                        0.01          (0.42)         (0.21)        (0.43)
Other after-tax adjustments                                           0.03          (0.61)          0.03         (1.39)
                                                             -------------- --------------   ------------- -------------
Net income                                                            0.67          (0.45)          1.75         (0.21)
                                                             ============== ==============   ============= =============
BOOK VALUE EXCLUDING OTHER COMPREHENSIVE INCOME:
Book value excluding other comprehensive income                      19.41          17.85          19.41         17.85
Net unrealized capital gains/(losses)                                 4.19           2.00           4.19          2.00
Foreign currency translation                                         (0.46)         (0.52)         (0.46)        (0.52)
                                                             -------------- --------------   ------------- -------------
Book value including other comprehensive income                      23.14          19.33          23.14         19.33
                                                             ============== ==============   ============= =============
OPERATING REVENUES:
USAMA                                                               871.9          865.9        2,626.9       2,863.7
IAMA                                                                 99.9           82.8          289.7         252.3
Life and Health                                                     995.7          987.7        3,009.8       2,950.7
Mortgage Banking                                                    288.1          312.9        1,145.1         731.3
Corporate and Other                                                  15.4          (15.8)           8.5           1.4
                                                             -------------- --------------   ------------- -------------
Total operating revenues                                          2,271.0        2,233.5        7,080.0       6,799.4
Net realized/unrealized capital gains (losses) and
     related     fee adjustments                                     (4.9)        (237.6)        (104.7)       (240.2)
                                                             -------------- --------------   ------------- -------------
Total GAAP revenues                                               2,266.1        1,995.9        6,975.3       6,559.2
                                                             ============== ==============   ============= =============
OPERATING EARNINGS:
USAMA                                                               110.5           84.9          316.2         287.2
IAMA                                                                  8.0            5.0           26.7          10.1
Life and Health                                                      52.8           55.7          174.8         171.7
Mortgage Banking                                                     29.2           62.5          126.6         113.8
Corporate and Other                                                   3.8           (5.6)         (11.6)        (11.3)
                                                             -------------- --------------   ------------- -------------
Total operating earnings                                            204.3          202.5          632.7         571.5
Net realized/unrealized capital gains (losses)                        1.8         (146.9)         (67.6)       (153.8)
Other after-tax adjustments                                          10.2         (214.0)           9.1        (490.8)
                                                             -------------- --------------   ------------- -------------
Net income                                                          216.3         (158.4)         574.2         (73.1)
                                                             ============== ==============   ============= =============
NET REALIZED/UNREALIZED CAPITAL GAINS (LOSSES):
Total net realized/unrealized capital gains (losses)                  1.8         (146.9)         (67.6)       (153.8)
Add:
Amortization of DPAC                                                  0.3           (6.5)          (3.0)        (18.8)
Capital gains (losses) distributed                                    1.1           (3.0)           3.0          18.8
Tax impacts                                                          (8.0)         (81.2)         (36.7)        (86.4)
Minority interest capital losses                                     (0.1)            -            (0.4)           -
Less related fee adjustments:
Unearned front-end fee income                                         0.8            2.0            5.1           6.0
Certain market value adjustments to fee revenues                       -            (9.0)         (16.5)        (22.2)
                                                             -------------- --------------   ------------- -------------
GAAP net realized/unrealized capital gains (losses)                  (5.7)        (230.6)         (93.3)       (224.0)
                                                             ============== ==============   ============= =============
OTHER AFTER TAX ADJUSTMENTS:
Demutualization expenses                                               -              -              -           (2.0)
Loss contingency reserve                                               -           (13.0)            -          (13.0)
FIN 46 implementation                                                (2.2)            -            (2.2)           -
SFAS 142 implementation                                                  -            -              -         (280.9)
Discontinued operations                                              12.4         (201.0)          11.3        (194.9)
                                                             -------------- --------------   ------------- -------------
Tootal other after-tax adjustments                                   10.2         (214.0)           9.1        (490.8)
                                                             ============== ==============   ============= =============

                                       10

- --------
1 We use a number of non-GAAP  financial  measures that management  believes are
useful to  investors  because they  illustrate  the  performance  of our normal,
ongoing  operations,  which is important in  understanding  and  evaluating  our
financial  condition  and  results  of  operations.   While  such  measures  are
consistent with measures utilized by investors to evaluate performance, they are
not a substitute for U.S. GAAP financial measures.  Therefore,  we have provided
reconciliations  of the  non-GAAP  financial  measures,  including  consolidated
operating  earnings and consolidated  operating  revenues,  to the most directly
comparable U.S. GAAP financial measure at the end of the release. We adjust U.S.
GAAP financial  measures for items not directly  related to ongoing  operations.
However, it is possible that these adjusting items have occurred in the past and
could recur in the future.  Management also uses non-GAAP financial measures for
goal   setting,   determining   employee  and  senior   management   awards  and
compensation,  and evaluating  performance on a basis comparable to that used by
securities analysts.

2 As a result of the sale of  substantially  all of BT  Financial  Group,  which
closed on October  31,  2002,  the  operating  earnings  of BT reflect  only the
corporate  overhead  expenses  allocated  to BT. This  treatment  is pursuant to
Statement of  Accounting  Standard No. 144,  Accounting  for the  Impairment  or
Disposal of Long-Lived  Assets  ("SFAS  144").  Under SFAS 144, all revenues and
expenses  (excluding  allocated corporate overhead) are reported as discontinued
operations. Therefore, third quarter 2002 results for BT reflect three months of
allocated expenses with no corresponding activity in 2003.

3 Other  items  that we are  unable to predict  could  significantly  affect net
income,  such  as  changes  to  laws,  regulations,   or  accounting  standards,
litigation,  or gains or losses from discontinued  operations.

4 Fourth  quarter  2003  guidance  is based on  certain  assumptions,  including
domestic  equity market  performance  improvement,  from  September 30, 2003, of
roughly two percent per quarter for the remainder of the year.

5 Full year 2004 guidance is based on certain  assumptions,  including  domestic
equity  market  performance  improvement  of roughly  two percent for the fourth
quarter of 2003, and roughly 2% per quarter for 2004. 6 "The Principal Financial
Group" and "The  Principal"  are  registered  trademarks  referring to Principal
Financial  Group,  Inc. 7 CFO  Magazine,  April/May  2003,  based on total plans
served in 2002 by  insurance  companies,  banks and  investment  firms.  8 As of
September 30, 2003

                                       11