Principal Financial (PFG) 10-K 17 Feb 10 2009 FY Annual report Financial data

Consolidated Statements of Fina

Consolidated Statements of Financial Position (USD $)
In Millions	Dec. 31, 2009	Dec. 31, 2008
Assets
Fixed maturities, available-for-sale	46220.6	40117.2
Fixed maturities, trading	1032.4	843.4
Equity securities, available-for-sale	214	242.7
Equity securities, trading	221.5	158
Mortgage loans	11845.6	13113.6
Real estate	1034.6	919.4
Policy loans	902.5	896.4
Other investments	2465.3	2816.6
Total investments	63936.5	59107.3
Cash and cash equivalents	2240.4	2,608
Accrued investment income	691.9	750.7
Premiums due and other receivables	1065.4	988.1
Deferred policy acquisition costs	3681.4	4,153
Property and equipment	489.3	518.2
Goodwill	386.4	375.5
Other intangibles	851.7	925.3
Separate account assets	62738.5	55142.6
Other assets	1677.9	3613.7
Total assets	137759.4	128182.4
Liabilities
Contractholder funds	39801.9	43086.6
Future policy benefits and claims	19248.3	18494.2
Other policyholder funds	559.2	536.2
Short-term debt	101.6	500.9
Long-term debt	1584.6	1290.5
Income taxes currently payable	2.8	1.9
Deferred income taxes	120.2	102.8
Separate account liabilities	62738.5	55142.6
Other liabilities	5585.9	6457.4
Total liabilities	129,743	125613.1
Stockholders' equity
Common stock, par value $.01 per share - 2,500.0 million shares authorized, 447.0 million and 387.0 million shares issued, and 319.0 million and 259.3 million shares outstanding at December 31, 2009 and 2008, respectively	4.5	3.9
Additional paid-in capital	9492.9	8376.5
Retained earnings	4160.7	3722.5
Accumulated other comprehensive loss	(1,042)	-4911.6
Treasury stock, at cost (128.0 million and 127.7 million shares at December 31, 2009 and 2008, respectively)	-4722.7	-4718.6
Total stockholders' equity attributable to Principal Financial Group, Inc.	7893.5	2472.8
Noncontrolling interest	122.9	96.5
Total stockholders' equity	8016.4	2569.3
Total liabilities and stockholders' equity	137759.4	128182.4
Series A
Stockholders' equity
Preferred stock, value	0	0
Series A | preferred stock
Stockholders' equity
Total stockholders' equity	0	0
Series B
Stockholders' equity
Preferred stock, value	0.1	0.1
Series B | preferred stock
Stockholders' equity
Total stockholders' equity	0.1	0.1

1_Consolidated Statements of Fi

Consolidated Statements of Financial Position (parenthetical) (USD $)
Share data in Millions, except Per Share data	Dec. 31, 2009	Dec. 31, 2008
Common stock, par value (in dollars per share)	0.01	0.01
Common stock, shares authorized	2,500	2,500
Common stock, shares issued	447	387
Common stock, shares outstanding	319	259.3
Treasury stock, shares	128	127.7
Series A
Preferred stock, par value (in dollars per share)	0.01	0.01
Preferred stock, liquidation preference (in dollars per share)	$100	$100
Preferred stock, shares authorized	3	3
Preferred stock, shares issued	3	3
Preferred stock, shares outstanding	3	3
Series B
Preferred stock, par value (in dollars per share)	0.01	0.01
Preferred stock, liquidation preference (in dollars per share)	$25	$25
Preferred stock, shares authorized	10	10
Preferred stock, shares issued	10	10
Preferred stock, shares outstanding	10	10

Consolidated Statements of Oper

Consolidated Statements of Operations (USD $)
In Millions, except Per Share data	12 Months Ended Dec. 31, 2009	12 Months Ended Dec. 31, 2008	12 Months Ended Dec. 31, 2007
Revenues
Premiums and other considerations	3750.6	4209.2	4634.1
Fees and other revenues	2,096	2426.5	2634.7
Net investment income	3400.8	3994.3	3966.5
Net realized capital gains (losses), excluding impairment losses on available-for-sale securities	54.9	-214.8	-14.7
Total other-than-temporary impairment losses on available-for-sale securities	-714.1	-479.3	-314.1
Portion of impairment losses on fixed maturities, available-for-sale recognized in other comprehensive income	260.9
Net impairment losses on available-for-sale securities	-453.2	-479.3	-314.1
Net realized capital losses	-398.3	-694.1	-328.8
Total revenues	8849.1	9935.9	10906.5
Expenses
Benefits, claims and settlement expenses	5334.5	6219.9	6435.3
Dividends to policyholders	242.2	267.3	293.8
Operating expenses	2526.6	2987.4	3,105
Total expenses	8103.3	9474.6	9834.1
Income from continuing operations before income taxes	745.8	461.3	1072.4
Income taxes (benefits)	100.1	-4.5	208.1
Income from continuing operations, net of related income taxes	645.7	465.8	864.3
Income from discontinued operations, net of related income taxes			20.2
Net income	645.7	465.8	884.5
Net income attributable to noncontrolling interest	23	7.7	24.2
Net income attributable to Principal Financial Group, Inc.	622.7	458.1	860.3
Preferred stock dividends	33	33	33
Net income available to common stockholders	589.7	425.1	827.3
Basic earnings per common share:
Income from continuing operations, net of related income taxes (in dollars per share)	1.98	1.64	3.04
Income from discontinued operations, net of related income taxes (in dollars per share)			0.08
Net income (in dollars per share)	1.98	1.64	3.12
Diluted earnings per common share:
Income from continuing operations, net of related income taxes (in dollars per share)	1.97	1.63	3.01
Income from discontinued operations, net of related income taxes (in dollars per share)			0.08
Net income (in dollars per share)	1.97	1.63	3.09

Consolidated Statements of Stoc

Consolidated Statements of Stockholders' Equity (USD $)
In Millions	Series A preferred stock	Series B preferred stock	Common stock	Additional paid-in capital	Retained earnings	Accumulated other comprehensive income (loss)	Treasury stock	Noncontrolling interest	Total
Balances at Dec. 31, 2006	$0	0.1	3.8	8141.8	2824.1	846.9	-3955.9	58.8	7919.6
Common stock issued			0.1	73.5					73.6
Capital transactions of equity method investee, net of related income taxes				1.1					1.1
Stock-based compensation and additional related tax benefits				79	-1.5				77.5
Treasury stock acquired, common							-756.3		-756.3
Dividends to common stockholders					-235.6				-235.6
Dividends to preferred stockholders					(33)				(33)
Distributions to noncontrolling interest								-13.4	-13.4
Contributions from noncontrolling interest								27.4	27.4
Comprehensive income (loss):
Net income					860.3			24.2	884.5
Net unrealized gains (losses), net						-541.9		-0.1	(542)
Foreign currency translation adjustment, net of related income taxes						62.5		0.7	63.2
Unrecognized postretirement benefit obligation, net of related income taxes						52.7			52.7
Comprehensive income (loss)									458.4
Balances at Dec. 31, 2007	0	0.1	3.9	8295.4	3414.3	420.2	-4712.2	97.6	7519.3
Common stock issued				36.4					36.4
Capital transactions of equity method investee, net of related income taxes				0.6					0.6
Stock-based compensation and additional related tax benefits				44.1	-1.1				43
Treasury stock acquired, common							-6.4		-6.4
Dividends to common stockholders					-116.7				-116.7
Dividends to preferred stockholders					(33)				(33)
Distributions to noncontrolling interest								-14.6	-14.6
Contributions from noncontrolling interest								7	7
Effects of changing postretirement benefit plan measurement date, net of related income taxes					0.9	(2)			-1.1
Comprehensive income (loss):
Net income					458.1			7.7	465.8
Net unrealized gains (losses), net						-4487.9			-4487.9
Foreign currency translation adjustment, net of related income taxes						-209.4		-1.2	-210.6
Unrecognized postretirement benefit obligation, net of related income taxes						-632.5			-632.5
Comprehensive income (loss)									-4865.2
Balances at Dec. 31, 2008	0	0.1	3.9	8376.5	3722.5	-4911.6	-4718.6	96.5	2569.3
Common stock issued			0.6	1122.4					1,123
Stock-based compensation and additional related tax benefits				39.9	-1.9				38
Treasury stock acquired, common							-4.1		-4.1
Dividends to common stockholders					-159.5				-159.5
Dividends to preferred stockholders					(33)				(33)
Distributions to noncontrolling interest								-7.1	-7.1
Purchase of subsidiary shares from noncontrolling interest				-45.9				0.2	-45.7
Contributions from noncontrolling interest								10.1	10.1
Effects of reclassifying noncredit component of previously recognized impairment losses on fixed maturities, available-for-sale, net					9.9	-9.9
Comprehensive income (loss):
Net income					622.7			23	645.7
Net unrealized gains (losses), net						3693.1			3693.1
Noncredit component of impairment losses on fixed maturities, available-for-sale, net						-152.9			-152.9
Foreign currency translation adjustment, net of related income taxes						168.2		0.2	168.4
Unrecognized postretirement benefit obligation, net of related income taxes						171.1			171.1
Comprehensive income (loss)									4525.4
Balances at Dec. 31, 2009	$0	0.1	4.5	9492.9	4160.7	($1,042)	-4722.7	122.9	8016.4

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (USD $)
In Millions	12 Months Ended Dec. 31, 2009	12 Months Ended Dec. 31, 2008	12 Months Ended Dec. 31, 2007	Dec. 31, 2006
Operating activities
Net income	645.7	465.8	884.5
Adjustments to reconcile net income to net cash provided by operating activities:
Income from discontinued operations, net of related income taxes			-20.2
Amortization of deferred policy acquisition costs	92.2	373.7	357.3
Additions to deferred policy acquisition costs	-482.4	-680.3	-606.1
Accrued investment income	58.8	23.4	-52.1
Net cash flows for trading securities	-127.4	(348)	-258.2
Premiums due and other receivables	-126.9	-39.2	191.8
Contractholder and policyholder liabilities and dividends	1530.9	2394.2	2276.7
Current and deferred income taxes (benefits)	65.7	-219.7	-70.3
Net realized capital losses	398.3	694.1	328.8
Depreciation and amortization expense	138.5	145	130.2
Mortgage loans held for sale, acquired or originated	-61.2	(92)	-83.8
Mortgage loans held for sale, sold or repaid, net of gain	75.4	73.7	166.8
Real estate acquired through operating activities	-19.8	-77.5	-48.2
Real estate sold through operating activities	5.2	24.5	43.7
Stock-based compensation	37.2	31.5	72.8
Other	12.8	-544.4	-353.7
Net adjustments	1597.3	1,759	2075.5
Net cash provided by operating activities	2,243	2224.8	2,960
Investing activities
Available-for-sale securities: Purchases	-7933.3	-6605.8	-10520.3
Available-for-sale securities: Sales	3573.6	1343.5	3039.6
Available-for-sale securities: Maturities	4434.3	3207.9	4461.6
Mortgage loans acquired or originated	-586.5	-3484.9	(3,108)
Mortgage loans sold or repaid	1704.4	2,902	2112.8
Real estate acquired	-62.2	-33.3	-115.2
Real estate sold	30.3	70.6	53
Net purchases of property and equipment	-26.2	(105)	-98.4
Purchases of interest in subsidiaries, net of cash acquired	-45.7	-20.3	-76.1
Net change in other investments	-61.9	-191.9	-248.2
Net cash provided by (used in) investing activities	1026.8	-2917.2	-4499.2
Financing activities
Issuance of common stock	1,123	36.4	73.6
Acquisition of treasury stock	-4.1	-6.4	-756.3
Proceeds from financing element derivatives	122	142.2	128.7
Payments for financing element derivatives	-67.4	-114.6	-137.2
Excess tax benefits from share-based payment arrangements	0.2	3.1	10.2
Dividends to common stockholders	-159.5	-116.7	-235.6
Dividends to preferred stockholders	(33)	(33)	-41.2
Issuance of long-term debt	745.1	7.9	0.2
Principal repayments of long-term debt	-468.2	-83.3	(115)
Net proceeds (repayments) of short-term borrowings	-405.1	217.4	203.9
Investment contract deposits	4224.1	11,349	9958.9
Investment contract withdrawals	-8752.7	-9813.7	-8209.9
Net increase in banking operation deposits	43.9	373.1	417.1
Other	-5.7	-5.4	-5.3
Net cash provided by (used in) financing activities	-3637.4	1,956	1292.1
Discontinued operations
Net cash provided by operating activities			2.5
Net cash used in investing activities			-1.3
Net cash used in financing activities			-0.5
Net cash provided by discontinued operations			0.7
Net increase (decrease) in cash and cash equivalents	-367.6	1263.6	-246.4
Cash and cash equivalents at beginning of year	2,608	1344.4	1590.8
Cash and cash equivalents at end of year	2240.4	2,608	1344.4	1590.8
Cash and cash equivalents of discontinued operations included above
At beginning of year			-0.7
At end of year				-0.7
Supplemental Information:
Cash paid for interest	129.9	111.3	115.1
Cash paid for income taxes	75.4	206.1	245.9

Nature of Operations and Signif

Nature of Operations and Significant Accounting Policies
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Nature of Operations and Significant Accounting Policies	1. Nature of Operations and Significant Accounting Policies Description of Business Principal Financial Group, Inc. ("PFG"), along with its consolidated subsidiaries, is a diversified financial services organization engaged in promoting retirement savings and investment and insurance products and services in the U.S. and selected international markets. Basis of Presentation The accompanying consolidated financial statements, which include our majority-owned subsidiaries and consolidated variable interest entities ("VIEs"), have been prepared in conformity with U.S. generally accepted accounting principles ("U.S.GAAP"). Less than majority-owned entities in which we have at least a 20% interest and limited liability companies ("LLCs"), partnerships and real estate joint ventures in which we have at least a 5% interest, are reported on the equity basis in the consolidated statements of financial position as other investments. Investments in LLCs, partnerships and real estate joint ventures in which we have an ownership percentage of 3% to 5% are accounted for under the equity or cost method depending upon the specific facts and circumstances of our ownership and involvement. All significant intercompany accounts and transactions have been eliminated. Information included in the notes to the financial statements excludes information applicable to less than majority-owned entities reported on the equity and cost methods, unless otherwise noted. We have evaluated subsequent events through February17, 2010, which was the date our consolidated financial statements were issued. Reclassifications have been made to prior period financial statements to conform to the December31, 2009, presentation. See Recent Accounting Pronouncements for impact of new accounting guidance on prior period financial statements. Closed Block Principal Life Insurance Company ("Principal Life") operates a closed block ("Closed Block") for the benefit of individual participating dividend-paying policies in force at the time of the 1998 mutual insurance holding company ("MIHC") formation. See Note7, Closed Block, for further details. Recent Accounting Pronouncements In January2010, the Financial Accounting Standards Board ("FASB") issued authoritative guidance that requires new disclosures related to fair value measurements and clarifies existing disclosure requirements about the level of disaggregation, inputs and valuation techniques. Specifically, reporting entities now must disclose separately the amounts of significant transfers in and out of Level1 and Level2 fair value measurements and describe the reasons for the transfers. In addition, in the reconciliation for Level3 fair value measurements, a reporting entity should present separately information about purchases, sales, issuances and settlements. The guidance clarifies that a reporting entity needs to use judgment in determining the appropriate classes of assets and liabilities for disclosure of fair value measurement, considering the level of disaggregated information required by other applicable GAAP guidance and should also provide disclosures about the valuation techniques and input

Discontinued Operations

Discontinued Operations
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Discontinued Operations	2. Discontinued Operations Real Estate Investments In 2007, we sold a real estate property previously held for investment purposes. This property qualifies for discontinued operations treatment. Therefore, the income from the discontinued operation has been removed from our results of continuing operations for all periods presented. The gain on disposal, which is reported in our Corporate segment, is excluded from segment operating earnings for all periods presented. We have separately disclosed the operating, investing and financing portions of the cash flows attributable to the discontinued operation in our consolidated statements of cash flows. Additionally, the information included in the notes to the financial statements excludes information applicable to this property, unless otherwise noted. The property was sold to take advantage of positive real estate market conditions in a specific geographic location and to further diversify our real estate portfolio. Selected financial information for the discontinued operation is as follows: For the year ended December31, 2009 2008 2007 (in millions) Total revenues $ $ $ 0.3 Income from discontinued operation attributable to Principal Financial Group,Inc.: Income before income taxes $ $ $ 0.3 Income taxes 0.1 Gain on disposal of discontinued operation 32.8 Income taxes on disposal 12.8 Net income $ $ $ 20.2

Goodwill and Other Intangible A

Goodwill and Other Intangible Assets
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Goodwill and Other Intangible Assets	3. Goodwill and Other Intangible Assets Goodwill The changes in the carrying amount of goodwill reported in our segments for 2008 and 2009 were as follows: U.S. Asset Accumulation Global Asset Management International Asset Management and Accumulation Life and Health Insurance Corporate Consolidated (in millions) Balances at January1, 2008 $ 71.7 $ 156.9 $ 57.6 $ 88.4 $ 0.1 $ 374.7 Goodwill from acquisitions 2.1 12.1 14.2 Foreign currency translation (12.2 ) (12.2 ) Other (1.2 ) 0.1 (0.1 ) (1.2 ) Balances at December31, 2008 72.6 169.0 45.4 88.5 375.5 Foreign currency translation 10.9 10.9 Balances at December31, 2009 $ 72.6 $ 169.0 $ 56.3 $ 88.5 $ $ 386.4 Finite Lived Intangibles Amortized intangible assets that continue to be subject to amortization over a weighted average remaining expected life of 13years were as follows: December31, 2009 2008 Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount (in millions) Present value of future profits $ 160.6 $ 62.2 $ 98.4 $ 135.7 $ 51.3 $ 84.4 Other finite lived intangibles 223.4 138.7 84.7 292.0 119.7 172.3 Total amortized intangibles $ 384.0 $ 200.9 $ 183.1 $ 427.7 $ 171.0 $ 256.7 Present Value of Future Profits.Present value of future profits ("PVFP") represents the present value of estimated future profits to be generated from existing insurance contracts in-force at the date of acquisition and is amortized over the expected policy or contract duration in relation to estimated gross profits. Interest rates used to calculate the estimated interest accruals were 9.00% for all years related to PVFP generated from Mexico acquisitions and 6.36% in 2007, related to PVFP generated from Chile acquisitions. The changes in the carrying amount of PVFP, reported in our International Asset Management and Accumulation segment for 2007, 2008 and 2009, were as follows (in millions): Balance at January1, 2007 $ 106.7 Interest accrued 9.4 Amortization (0.1 ) Impairments (1.3 ) Foreign currency translation (0.8 ) Other (0.3 ) Balance at December31, 2007 113.6 Interest accrued 9.5 Amortization (15.8 ) Foreign currency translation (22.9 ) Balance at December31, 2008 84.4 Interest accrued 7.6 Amortization (8.9 ) Foreign currency translation 5.1 Other 10.2 Balance at December31, 2009 $ 98.4 At December31, 2009, the estimated amortization expense related to PVFP for the next five years is as follows (in millions): Year ending December31: 2010 $ 2.

Variable Interest Entities

Variable Interest Entities
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Variable Interest Entities	4. Variable Interest Entities We have relationships with various types of special purpose entities and other entities where we have a variable interest. The following serves as a discussion of investments in entities that meet the definition of a VIE. Consolidated Variable Interest Entities Synthetic Collateralized Debt Obligation.On May26, 2005, we invested $130.0million in a secured credit-linked note issued by a grantor trust. The trust entered into a credit default swap providing credit protection on the first 45% of loss of seven mezzanine tranches totaling $288.9million of seven synthetic reference portfolios. Subordination for the seven mezzanine tranches ranged from 1.29% to 4.79%. Therefore, defaults in an underlying reference portfolio only affected the credit-linked note if cumulative losses exceeded the subordination of a synthetic reference portfolio. As of December31, 2008, the credit default swap entered into by the trust had an outstanding notional amount of $130.0million. The credit default swap counterparties of the grantor trusts had no recourse to our assets. In October 2009, the grantor trust was terminated and we received $122.2million in cash. We determined that this grantor trust was a VIE and that we were the primary beneficiary of the trust as we were the sole investor in the trust and the manager of the synthetic reference portfolios. Upon consolidation of the trust, as of December31, 2008, our consolidated statements of financial position included $93.5million of available-for-sale fixed maturity securities, which represented the collateral held by the trust. The assets of the trust were held by a trustee and could only be liquidated to settle obligations of the trust. These obligations included losses on the synthetic reference portfolio and the return of investments due to maturity or termination of the trust. As of December31, 2008, our consolidated statements of financial position included $53.4million of other liabilities representing derivative market values of the trust. During the year December31, 2008 and 2007, the credit default swaps had a change in fair value that resulted in a $54.5million pre-tax loss and $3.2million pre-tax loss, respectively. During the year ended December31, 2009, we recognized a pre-tax gain of $49.8million related to the change in fair value and termination of the credit default swaps. Grantor Trusts.We contributed undated subordinated floating rate notes to three grantor trusts. The trusts separated the cash flows of the underlying $425.9million par value notes by issuing an interest-only certificate and a residual certificate related to each note contributed. Each interest-only certificate entitles the holder to interest on the stated note for a specified term while the residual certificate entitles the holder to interest payments subsequent to the term of the interest-only certificate and to all principal payments. We retained the interest-only certificate and the residual certificates were subsequently sold to a third party. We have determined that these grantor trusts are VIEs as our interest-only certificates are exposed to the majority of the risk

Investments

Investments
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Investments	5. Investments Fixed Maturities and Equity Securities The amortized cost, gross unrealized gains and losses, other-than-temporary impairments in accumulated OCI ("AOCI") and fair value of fixed maturities and equity securities available-for-sale as of December31, 2009 and 2008, are summarized as follows: Amortized Cost Gross unrealized gains Gross unrealized losses Other-than- temporary impairments in AOCI Fair value (in millions) December31, 2009 Fixed maturities, available-for-sale: U.S. government and agencies $ 550.1 $ 9.1 $ 0.5 $ $ 558.7 Non-U.S. governments 741.5 114.8 1.4 854.9 States and political subdivisions 2,008.7 53.4 13.5 2,048.6 Corporate 32,767.0 1,296.8 1,075.0 58.0 32,930.8 Residential mortgage-backed securities 3,049.5 87.4 3.8 3,133.1 Commercial mortgage-backed securities 4,898.0 20.9 1,211.5 107.7 3,599.7 Collateralized debt obligations 607.5 1.8 200.7 39.0 369.6 Other debt obligations 2,994.1 34.6 229.8 73.7 2,725.2 Total fixed maturities, available-for-sale $ 47,616.4 $ 1,618.8 $ 2,736.2 $ 278.4 $ 46,220.6 Total equity securities, available-for-sale $ 231.1 $ 17.2 $ 34.3 $ 214.0 December31, 2008 Fixed maturities, available-for-sale: U.S. government and agencies $ 548.4 $ 46.9 $ 0.1 $ 595.2 Non-U.S. governments 757.7 96.2 15.4 838.5 States and political subdivisions 2,113.8 32.6 120.9 2,025.5 Corporate public 21,743.4 200.1 3,064.9 18,878.6 Corporate private 12,315.9 153.8 2,104.3 10,365.4 Mortgage-backed and other asset-backed securities 10,346.2 79.5 3,011.7 7,414.0 Total fixed maturities, available-for-sale $ 47,825.4 $ 609.1 $ 8,317.3 $ 40,117.2 Total equity securities, available-for-sale $ 307.9 $ 29.1 $ 94.3 $ 242.7 The amortized cost and fair value of fixed maturities available-for-sale at December31, 2009, by expected maturity, were as follows: Amortized Cost Fair value (in millions) Due in one year or less $ 1,559.1 $ 1,587.0 Due after one year through five years 13,698.4 14,099.4 Due after five years through ten years 9,265.7 9,383.4 Due after ten years 11,544.1 11,323.2 36,067.3 36,393.0 Mortgage-backed and other asset-backed securities 11,549.1 9,827.6 Total $ 47,616.4 $ 46,220.6 Actual maturities may differ because borrowers may have the right to call or prepay obligations. Our portfolio is diversified by industry, issuer and asset class. Credit concentrations are managed to established limits

Derivative Financial Instrument

Derivative Financial Instruments
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Derivative Financial Instruments	6. Derivative Financial Instruments Derivatives are generally used to hedge or reduce exposure to market risks associated with assets held or expected to be purchased or sold and liabilities incurred or expected to be incurred. Derivatives are used to change the characteristics of our asset/liability mix consistent with our risk management activities. Derivatives are also used in asset replication strategies. We have not bought, sold or held these investments for trading purposes. Types of Derivative Instruments Interest Rate Contracts Interest rate risk is the risk that we will incur economic losses due to adverse changes in interest rates. Sources of interest rate risk include the difference between the maturity and interest rate changes of assets with the liabilities they support, timing differences between the pricing of liabilities and the purchase or procurement of assets and changing cash flow profiles from original projections due to prepayment options embedded within asset and liability contracts. We use various derivatives to manage our exposure to fluctuations in interest rates. Interest rate swaps are contracts in which we agree with other parties to exchange, at specified intervals, the difference between fixed rate and floating rate interest amounts based upon designated market rates or rate indices and an agreed upon notional principal amount. Generally, no cash is exchanged at the outset of the contract and no principal payments are made by either party. Cash is paid or received based on the terms of the swap. These transactions are entered into pursuant to master agreements that provide for a single net payment to be made by one counterparty at each due date. We use interest rate swaps primarily to more closely match the interest rate characteristics of assets and liabilities arising from timing mismatches between assets and liabilities (including duration mismatches). We also use interest rate swaps to hedge against changes in the value of assets we anticipate acquiring and other anticipated transactions and commitments. Interest rate swaps are used to hedge against changes in the value of the guaranteed minimum withdrawal benefit ("GMWB") liability. The GMWB rider on our variable annuity products provides for guaranteed minimum withdrawal benefits regardless of the actual performance of various equity and/or fixed income funds available with the product. A swaption is an option to enter into an interest rate swap at a future date. We have written these options and received a premium in order to transform our callable liabilities into fixed term liabilities. Swaptions provide us the benefit of the agreed-upon strike rate if the market rates for liabilities are higher, with the flexibility to enter into the current market rate swap if the market rates for liabilities are lower. Swaptions not only hedge against the downside risk, but also allow us to take advantage of any upside benefits. In exchange-traded futures transactions, we agree to purchase or sell a specified number of contracts, the values of which are determined by the values of designated classes of securities, and to post variation margin

Closed Block

Closed Block
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Closed Block	7. Closed Block In connection with the 1998 MIHC formation, Principal Life formed a Closed Block to provide reasonable assurance to policyholders included therein that, after the formation of the MIHC, assets would be available to maintain dividends in aggregate in accordance with the 1997 policy dividend scales, if the experience underlying such scales continued. Assets of Principal Life were allocated to the Closed Block in an amount that produces cash flows which, together with anticipated revenue from policies and contracts included in the Closed Block, were expected to be sufficient to support the Closed Block policies, including, but not limited to, provisions for payment of claims, certain expenses, charges and taxes, and to provide for continuation of policy and contract dividends in aggregate in accordance with the 1997 dividend scales, if the experience underlying such scales continues, and to allow for appropriate adjustments in such scales, if such experience changes. Due to adjustable life policies being included in the Closed Block, the Closed Block is charged with amounts necessary to properly fund for certain adjustments, such as face amount and premium increases, that are made to these policies after the Closed Block inception date. These amounts are referred to as Funding Adjustment Charges and are treated as capital transfers from the Closed Block. Assets allocated to the Closed Block inure solely to the benefit of the holders of policies included in the Closed Block. Closed Block assets and liabilities are carried on the same basis as other similar assets and liabilities. Principal Life will continue to pay guaranteed benefits under all policies, including the policies within the Closed Block, in accordance with their terms. If the assets allocated to the Closed Block, the investment cash flows from those assets and the revenues from the policies included in the Closed Block, including investment income thereon, prove to be insufficient to pay the benefits guaranteed under the policies included in the Closed Block, Principal Life will be required to make such payments from their general funds. No additional policies were added to the Closed Block, nor was the Closed Block affected in any other way, as a result of the demutualization. A policyholder dividend obligation ("PDO") is required to be established for earnings in the Closed Block that are not available to stockholders. A model of the Closed Block was established to produce the pattern of expected earnings in the Closed Block, adjusted to eliminate the impact of related amounts in accumulated other comprehensive income. If actual cumulative earnings of the Closed Block are greater than the expected cumulative earnings of the Closed Block, only the expected cumulative earnings will be recognized in income with the excess recorded as a PDO. This PDO represents undistributed accumulated earnings that will be paid to Closed Block policyholders as additional policyholder dividends unless offset by future performance of the Closed Block that is less favorable than originally expected. If actual cumulative performance is less favorable than expected, only a

Deferred Policy Acquisition Cos

Deferred Policy Acquisition Costs
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Deferred Policy Acquisition Costs	8. Deferred Policy Acquisition Costs Policy acquisition costs deferred and amortized in 2009, 2008 and 2007 were as follows: For the year ended December31, 2009 2008 2007 (in millions) Balance at beginning of year $ 4,153.0 $ 2,810.1 $ 2,418.9 Cost deferred during the year 482.4 680.3 606.1 Amortized to expense during the year(1) (92.2 ) (373.7 ) (357.3 ) Adjustment related to unrealized (gains) losses on available-for-sale securities and derivative instruments (861.8 ) 1,036.3 143.1 Other (0.7 ) Balance at end of year $ 3,681.4 $ 4,153.0 $ 2,810.1 (1) Includes adjustments for revisions to estimated gross profits.

Insurance Liabilities

Insurance Liabilities
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Insurance Liabilities	9. Insurance Liabilities Contractholder Funds Major components of contractholder funds in the consolidated statements of financial position are summarized as follows: December31, 2009 2008 (in millions) Liabilities for investment-type insurance contracts: GICs $ 10,839.2 $ 11,857.4 Funding agreements 12,511.2 15,757.3 Other investment-type insurance contracts 891.4 987.1 Total liabilities for investment-type insurance contracts 24,241.8 28,601.8 Liabilities for individual annuities 11,431.0 10,674.9 Universal life and other reserves 4,129.1 3,809.9 Total contractholder funds $ 39,801.9 $ 43,086.6 Our GICs and funding agreements contain provisions limiting or prohibiting early surrenders, which typically include penalties for early surrenders, minimum notice requirements or, in the case of funding agreements with survivor options, minimum pre-death holding periods and specific maximum amounts. Funding agreements include those issued directly to nonqualified institutional investors, as well as to four separate programs where the funding agreements have been issued directly or indirectly to unconsolidated special purpose entities. Claims for principal and interest under funding agreements are afforded equal priority to claims of life insurance and annuity policyholders under insolvency provisions of Iowa Insurance Laws. We are authorized to issue up to $4.0billion of funding agreements under a program established in 1998 to support the prospective issuance of medium term notes by an unaffiliated entity in non-U.S. markets. As of December31, 2009 and 2008, $2,502.2million and $3,159.1million, respectively, of liabilities are outstanding with respect to the issuance outstanding under this program. We do not anticipate any new issuance activity under this program as we are authorized to issue up to Euro4.0billion (approximately USD$5.3billion) of funding agreements under a program established in 2006 to support the prospective issuance of medium term notes by an unaffiliated entity in non-U.S. markets. The unaffiliated entity is an unconsolidated special purpose vehicle. As of December31, 2009 and 2008, $1,404.2million and $1,415.2million, respectively, of liabilities are outstanding with respect to the issuances outstanding under this program. In addition, we were authorized to issue up to $7.0billion of funding agreements under a program established in 2001 to support the prospective issuance of medium term notes by an unaffiliated entity in both domestic and international markets. The unaffiliated entity is an unconsolidated qualifying special purpose entity. As of December31, 2009 and 2008, $2,474.0million and $2,468.7million, respectively, of liabilities are being held with respect to the issuance outstanding under this program. We do not anticipate any new issuance activity under this program, given our December 2005 termination of the dealership agreement for this program and the availability of the SEC-registered program described in the following paragraph. We

Debt

Debt
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Debt	10. Debt Short-Term Debt The components of short-term debt as of December31, 2009 and 2008, were as follows: December31, 2009 2008 (in millions) Commercial paper $ 75.0 $ 482.3 Other recourse short-term debt 26.6 18.6 Total short-term debt $ 101.6 $ 500.9 As of December31, 2009, we had credit facilities with various financial institutions in an aggregate amount of $681.9million. As of December31, 2009 and 2008, we had $101.6million and $500.9million, respectively, of outstanding borrowings related to our credit facilities, with zero assets pledged as support. Our credit facilities include a $579.0million commercial paper program, of which $75.0million was outstanding as of December31, 2009. Our commercial paper program has a back-stop facility to provide 100% support for our commercial paper program, of which there were no outstanding balances as of December31, 2009. The weighted-average interest rates on short-term borrowings as of December31, 2009 and 2008, were 0.7% and 2.7%, respectively. Long-Term Debt The components of long-term debt as of December31, 2009 and 2008, were as follows: December31, 2009 2008 (in millions) 8.2% notes payable, due 2009 $ $ 454.9 3.31% notes payable, due 2011 61.2 49.9 3.63% notes payable, due 2011 31.4 25.6 7.875% notes payable, due 2014 400.0 8.875% notes payable, due 2019 350.0 6.05% notes payable, due 2036 601.8 601.8 8% surplus notes payable, due 2044 99.2 99.2 Non-recourse mortgages and notes payable 40.6 58.7 Other mortgages and notes payable 0.4 0.4 Total long-term debt $ 1,584.6 $ 1,290.5 The amounts included above are net of the discount and premium associated with issuing these notes, which are being amortized to expense over their respective terms using the interest method. On May18, 2009, we issued $750.0million of senior notes. We issued a $400.0million series of notes that bear interest at 7.875% and will mature on May15, 2014, and a $350.0million series of notes that bear interest at 8.875% and will mature on May15, 2019. Interest on the notes is payable semi-annually on May15 and November15 each year, beginning on November15, 2009. The proceeds were primarily used to refinance $440.9million of notes that matured on August15, 2009, with the remaining proceeds being used for general corporate purposes. On October16 and December5, 2006, we issued $500.0million and $100.0million, respectively, of senior notes. The notes bear interest at a rate of 6.05% per year. Interest on the notes is payable semi-annually on April15 and October15 each year and began on April15, 2007. The notes will mature on October15, 2036. A portion of the proceeds were used to fund the 2006 acquisition of WM Advisors,Inc., with the remaining proceeds being used for general corporate purposes. On November3, 2005, Principal International de ChileS.A., a wholly owned indirect subsidiary, entered into long-term borrowing agreements with two Chile

Income Taxes

Income Taxes
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Income Taxes	11. Income Taxes Our income tax expense (benefit) from continuing operations was as follows: For the year ended December31, 2009 2008 2007 (in millions) Current income taxes: U.S. federal $ 97.7 $ 118.9 $ 214.6 State and foreign 19.4 (4.0 ) 64.3 Total current income taxes 117.1 114.9 278.9 Deferred income taxes (17.0 ) (119.4 ) (70.8 ) Total income taxes (benefits) $ 100.1 $ (4.5 ) $ 208.1 Our provision for income taxes may not have the customary relationship of taxes to income. A reconciliation between the U.S. corporate income tax rate and the effective tax rate from continuing operations is as follows: For the year ended December31, 2009 2008 2007 U.S. corporate income tax rate 35 % 35 % 35 % Dividends received deduction (10 ) (18 ) (11 ) Interest exclusion from taxable income (3 ) (6 ) (2 ) Impact of equity method presentation (5 ) (7 ) (2 ) Other (4 ) (5 ) (1 ) Effective income tax rate 13 % (1 )% 19 % As of December31, 2009, the total unrecognized tax benefits were $54.5million. Of this amount, $22.1million, if recognized, would reduce the 2009 effective tax rate. We recognize interest and penalties related to uncertain tax positions in operating expenses. As of December31, 2009 and 2008, we had recognized $22.5million and $21.3million of accumulated pre-tax interest and penalties related to unrecognized tax benefits, respectively. A summary of the changes in unrecognized tax benefits follows. Fortheyearended December31, 2009 2008 Balance at beginning of year $ 62.9 $ 98.8 Additions based on tax positions related to the current year 1.6 1.7 Additions for tax positions of prior years 3.3 4.1 Reductions for tax positions related to the current year (8.2 ) (2.1 ) Reductions for tax positions of prior years (1.6 ) (0.3 ) Settlements (3.5 ) (39.3 ) Balance at end of year $ 54.5 $ 62.9 Significant components of our net deferred income taxes were as follows: December31, 2009 2008 (in millions) Deferred income tax assets: Net unrealized losses on available-for-sale securities $ 403.0 $ 2,271.9 Insurance liabilities 318.0 368.9 Net operating and capital loss carryforwards 355.7 197.9 Postretirement benefits 331.8 482.8 Stock-based compensation 60.4 57.6 Other deferred income tax assets 62.6 73.5 Gross deferred income tax assets 1,531.5 3,452.6 Valuation allowance (1.0 ) (5.6 ) Total deferred income tax assets 1,530.5 3,447.0 Deferred income tax liabilities: Deferred policy acquisition costs (983.9 ) (858.4 ) Real estate (105.6 ) (150.5 ) Intangible assets (102.0 ) (76.7

Employee and Agent Benefits

Employee and Agent Benefits
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Employee and Agent Benefits	12. Employee and Agent Benefits We have defined benefit pension plans covering substantially all of our U.S. employees and certain agents. Some of these plans provide supplemental pension benefits to employees with salaries and/or pension benefits in excess of the qualified plan limits imposed by federal tax law. The employees and agents are generally first eligible for the pension plans when they reach age21. For plan participants employed prior to January1, 2002, the pension benefits are based on the greater of a final averagepay benefit or a cash balance benefit. The final averagepay benefit is based on the years of service and generally the employee's or agent's averageannual compensation during the last five years of employment. Partial benefit accrual of final averagepay benefits is recognized from first eligibility until retirement based on attained service divided by potential service to age65 with a minimum of 35years of potential service. The cash balance portion of the plan started on January1, 2002. An employee's account is credited with an amount based on the employee's salary, ageand service. These credits accrue with interest. For plan participants hired on and after January1, 2002, only the cash balance plan applies. Our policy is to fund the cost of providing pension benefits in the years that the employees and agents are providing service to us. Our funding policy for the qualified defined benefit plan is to contribute an amount annually at least equal to the minimum annual contribution required under the Employee Retirement Income Security Act ("ERISA"), and, generally, not greater than the maximum amount that can be deducted for federal income tax purposes. Our funding policy for the non-qualified benefit plan is to fund the plan in the years that the employees are providing service, taking into account the funded status of the trust. While we designate assets to cover the computed liability of the non-qualified plan, the assets are not included as part of the asset balances presented in this footnote as they do not qualify as plan assets in accordance with U.S.GAAP. We also provide certain health care, life insurance and long-term care benefits for retired employees. Subsidized retiree health benefits are provided for employees hired prior to January1, 2002. Employees hired after December31, 2001, have access to retiree health benefits but it is intended that they pay for the full cost of the coverage. The health care plans are contributory with participants' contributions adjusted annually. The contributions are based on the number of years of service and ageat retirement for those hired prior to January1, 2002. As part of the substantive plan, the retiree health contributions are assumed to be adjusted in the future as claim levels change. The life insurance plans are contributory for a small group of previously grandfathered participants that have elected supplemental coverageand dependent coverage. Covered employees are first eligible for the health and life postretirement benefits when they reach age57 and have completed ten years of service with us. Retiree long-term care benefits are provided for emplo

Contingencies, Guarantees and I

Contingencies, Guarantees and Indemnifications
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Contingencies, Guarantees and Indemnifications	13. Contingencies, Guarantees and Indemnifications Litigation and Regulatory Contingencies We are regularly involved in litigation, both as a defendant and as a plaintiff, but primarily as a defendant. Litigation naming us as a defendant ordinarily arises out of our business operations as a provider of asset management and accumulation products and services, life, health and disability insurance. Some of the lawsuits are class actions, or purport to be, and some include claims for unspecified or substantial punitive and treble damages. In addition, regulatory bodies, such as state insurance departments, the SEC, the Financial Industry Regulatory Authority, the Department of Labor and other regulatory bodies regularly make inquiries and conduct examinations or investigations concerning our compliance with, among other things, insurance laws, securities laws, ERISA and laws governing the activities of broker-dealers. We receive requests from regulators and other governmental authorities relating to other industry issues and may receive additional requests, including subpoenas and interrogatories, in the future. On November8, 2006, a trustee of Fairmount ParkInc. Retirement Savings Plan filed a putative class action lawsuit in the United States District Court for the Southern District of Illinois against Principal Life. Principal Life's Motion to Transfer Venue was granted and the case is now pending in the Southern District of Iowa. The complaint alleged, among other things, that Principal Life breached its alleged fiduciary duties while performing services to 401(k) plans by failing to disclose, or adequately disclose, to employers or plan participants the fact that Principal Life receives "revenue sharing fees from mutual funds that are included in its pre-packaged 401(k) plans" and allegedly failed to use the revenue to defray the expenses of the services provided to the plans. Plaintiff further alleged that these acts constitute prohibited transactions under ERISA. Plaintiff sought to certify a class of all retirement plans to which Principal Life was a service provider and for which Principal Life received and retained "revenue sharing" fees from mutual funds. On August27, 2008, the Plaintiff's Motion for Class Certification was denied. The Plaintiff filed a petition seeking permission to appeal that ruling. The petition was denied on October28, 2008. On May11, 2009, Plaintiff filed a new Motion for Class Certification. Principal Life is aggressively defending the lawsuit. On August28, 2007, two plaintiffs, Walsh and Young, filed a putative class action lawsuit in the United States District Court for the Southern District of Iowa against Principal Life and Princor Financial Services Corporation (the "Principal Defendants"). The lawsuit alleges that the Principal Defendants breached alleged fiduciary duties to participants in employer-sponsored 401(k) plans who were retiring or leaving their respective plans, including providing misleading information and failing to act solely in the interests of the participants, resulting in alleged violations of ERISA. The Principal Defendants are aggressively defending the lawsuit. On

Stockholders' Equity

Stockholders' Equity
	1/1/2009 - 12/31/2009 USD / shares
Notes to Consolidated Financial Statements
Stockholders' Equity	14. Stockholders' Equity Preferred Stock As of December31, 2009, we had 13.0million shares of preferred stock authorized, issued and outstanding under the two series described below. Preferred stockholders have dividend and liquidation priority over common stockholders. SeriesA.On June16, 2005, we issued 3.0million shares of fixed rate, non-cumulative, SeriesA Perpetual Preferred Stock ("SeriesA Preferred Stock"), at an initial offering price of $100 per share. We received net proceeds of $296.0million after offering costs. Dividends on the SeriesA Preferred Stock are non-cumulative and are payable quarterly when, and if, declared by our Board of Directors. Dividends commenced on September30, 2005, at a rate of 5.563% per annum of the liquidation preference. On or after the dividend payment date in June 2015, the SeriesA initial distribution rate will become a floating rate, subject to reset, at our option, subject to certain conditions and parameters. If reset, the rate may be at fixed or floating rates. On or after the dividend payment date in June 2015, we may, at our option, redeem the shares at a price of $100 per share, or $300.0million in the aggregate, plus accrued and unpaid dividends for the then current dividend period to the date of redemption, if any. The SeriesA Preferred Stock has no stated maturity and is not convertible into any other of our securities. SeriesA Preferred Stock will have no voting rights, except with respect to certain fundamental changes in the terms of the shares and in the case of certain dividend non-payments. SeriesB.On June16, 2005, we issued 10.0million shares of fixed rate, non-cumulative, SeriesB Perpetual Preferred Stock ("SeriesB Preferred Stock"), at an initial offering price of $25 per share. We received net proceeds of $246.0million after offering costs. Dividends on the SeriesB Preferred Stock are non-cumulative and are payable quarterly when, and if, declared by the Board of Directors. Dividends commenced on September30, 2005, at a rate of 6.518% per annum of the liquidation preference. On or after the dividend payment date in June 2035, the SeriesB initial distribution rate will become a floating rate, subject to reset, at our option, subject to certain conditions and parameters. If reset, the rate may be at fixed or floating rates. On or after the dividend payment date in June 2015, we may, at our option, redeem the shares at a price of $25 per share, or $250.0million in the aggregate, plus accrued and unpaid dividends for the then current dividend period to the date of redemption, if any. The SeriesB Preferred Stock has no stated maturity and is not convertible into any other of our securities. SeriesB Preferred Stock will have no voting rights, except with respect to certain fundamental changes in the terms of the shares and in the case of certain dividend non-payments. Dividend Restrictions and Payments The certificates of designation for the SeriesA and B Preferred Stock restrict the declaration of preferred dividends if we fail to meet specified capital adequacy, net income or stockholders' equity levels. As of December31, 2009, we have no preferred dividend r

Fair Value of Financial Instrum

Fair Value of Financial Instruments
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Fair Value of Financial Instruments	15. Fair Value of Financial Instruments We use fair value measurements to record fair value of certain assets and liabilities and to estimate fair value of financial instruments not recorded at fair value but required to be disclosed at fair value. Certain financial instruments, particularly policyholder liabilities other than investment-type insurance contracts, are excluded from these fair value disclosure requirements. Determination of fair value The following discussion describes the valuation methodologies used for assets and liabilities measured at fair value on a recurring basis or disclosed at fair value. The techniques utilized in estimating the fair values of financial instruments are reliant on the assumptions used. Care should be exercised in deriving conclusions about our business, its value or financial position based on the fair value information of financial instruments presented below. Fair value estimates are made at a specific point in time, based on available market information and judgments about the financial instrument. Such estimates do not consider the tax impact of the realization of unrealized gains or losses. In addition, the disclosed fair value may not be realized in the immediate settlement of the financial instrument. We validate prices through an investment analyst review process, which includes validation through direct interaction with external sources, review of recent trade activity or use of internal models. In circumstances where broker quotes are used to value an instrument, we generally receive one non-binding quote. Broker quotes are validated through an investment analyst review process, which includes validation through direct interaction with external sources and use of internal models or other relevant information. We did not make any significant changes to our valuation processes during 2009. Fixed Maturities and Equity Securities In determining fair value for fixed maturities, our first priority is to obtain prices from third party pricing vendors. We have regular interaction with these vendors to ensure we understand their pricing methodologies and to confirm that they are utilizing observable market information. Their methodologies vary by asset class and include inputs such as estimated cash flows, benchmark yields, reported trades, broker quotes, credit quality, industry events and economic events. If we are unable to price a fixed maturity security using prices from third party pricing vendors or other sources specific to corporate bonds, as described below, we may obtain a broker quote or utilize an internal pricing model specific to the asset utilizing relevant market information, to the extent available. As of December31, 2009, less than 1% of our fixed maturity securities, which were classified as Level3 assets, were valued using internal pricing models. For corporate bonds where quoted market prices are not available, a matrix pricing valuation approach is used. In this approach, securities are grouped into pricing categories that vary by sector, rating and average life. Each pricing category is assigned a risk spread based on studies of observable public market

Statutory Insurance Financial I

Statutory Insurance Financial Information
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Statutory Insurance Financial Information	16. Statutory Insurance Financial Information Principal Life, the largest indirect subsidiary of PFG, prepares statutory financial statements in accordance with the accounting practices prescribed or permitted by the Insurance Division of the Department of Commerce of the State of Iowa (the "State of Iowa"). The State of Iowa recognizes only statutory accounting practices prescribed or permitted by the State of Iowa for determining and reporting the financial condition and results of operations of an insurance company to determine its solvency under the Iowa Insurance Law. The National Association of Insurance Commissioners' ("NAIC") Accounting Practices and Procedures Manual has been adopted as a component of prescribed practices by the State of Iowa. The Commissioner has the right to permit other specific practices that deviate from prescribed practices. Our use of prescribed and permitted statutory accounting practices has resulted in higher statutory surplus of $246.1million relative to the accounting practices and procedures of the NAIC primarily due to a state prescribed practice associated with reinsurance of our term life products and "secondary" or "no lapse" guarantee provisions on our universal life products. Statutory accounting practices differ from U.S.GAAP primarily due to charging policy acquisition costs to expense as incurred, establishing reserves using different actuarial assumptions, valuing investments on a different basis and not admitting certain assets, including certain net deferred income tax assets. Life and health insurance companies are subject to certain risk-based capital ("RBC") requirements as specified by the NAIC. Under those requirements, the amount of capital and surplus maintained by a life and health insurance company is to be determined based on the various risk factors related to it. At December31, 2009, Principal Life meets the minimum RBC requirements. Statutory net income and statutory surplus of Principal Life were as follows: As of or for the year ended December31, 2009 2008 2007 (inmillions) Statutory net income $ 42.1 $ 83.3 $ 540.2 Statutory surplus 4,586.2 4,807.7 3,695.0

Segment Information

Segment Information
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Segment Information	17. Segment Information We provide financial products and services through the following segments: U.S. Asset Accumulation, Global Asset Management, International Asset Management and Accumulation and Life and Health Insurance. In addition, there is a Corporate segment. The segments are managed and reported separately because they provide different products and services, have different strategies or have different markets and distribution channels. The U.S. Asset Accumulation segment provides retirement and related financial products and services primarily to businesses, their employees and other individuals. The Global Asset Management segment provides asset management services to our asset accumulation business, our life and health insurance operations, the Corporate segment and third-party clients. The International Asset Management and Accumulation segment consists of Principal International, which has operations in Brazil, Chile, China, Hong Kong Special Administrative Region, India, Indonesia, Malaysia, Mexico and Singapore. We focus on countries with large middle classes, favorable demographics and growing long-term savings, ideally with defined contribution markets. We entered these countries through acquisitions, start-up operations and joint ventures. The Life and Health insurance segment provides individual life insurance, group health insurance and specialty benefits, which consists of group dental and vision insurance, individual and group disability insurance and group life insurance, throughout the United States. The Corporate segment manages the assets representing capital that has not been allocated to any other segment. Financial results of the Corporate segment primarily reflect our financing activities (including interest expense and preferred stock dividends), income on capital not allocated to other segments, inter-segment eliminations, income tax risks and certain income, expenses and other after-tax adjustments not allocated to the segments based on the nature of such items. Management uses segment operating earnings in goal setting, as a basis for determining employee compensation and in evaluating performance on a basis comparable to that used by securities analysts. We determine segment operating earnings by adjusting U.S.GAAP net income for net realized capital gains (losses), as adjusted, and other after-tax adjustments which management believes are not indicative of overall operating trends. Net realized capital gains (losses), as adjusted, are net of income taxes, related changes in the amortization pattern of DPAC and sales inducements, recognition of deferred front-end fee revenues for sales charges on retirement products and services, net realized capital gains and losses distributed, minority interest capital gains and losses and certain market value adjustments to fee revenues. Net realized capital gains (losses), as adjusted, exclude periodic settlements and accruals on non-hedge derivative instruments and exclude certain market value adjustments of embedded derivatives. Segment operating revenues exclude net realized capital gains (losses) (except periodic settlements and accruals

Stock-Based Compensation Plans

Stock-Based Compensation Plans
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Stock-Based Compensation Plans	18. Stock-Based Compensation Plans As of December31, 2009, we have the 2005 Stock Incentive Plan, the Employee Stock Purchase Plan, the 2005 Directors Stock Plan, the Stock Incentive Plan, the Directors Stock Plan and the Long-Term Performance Plan ("Stock-Based Compensation Plans"). As of May17, 2005, no new grants will be made under the Stock Incentive Plan, the Directors Stock Plan or the Long-Term Performance Plan. Under the terms of the 2005 Stock Incentive Plan, grants may be nonqualified stock options, incentive stock options qualifying under Section422 of the Internal Revenue Code, restricted stock, restricted stock units, stock appreciation rights, performance shares, performance units or other stock based awards. The 2005 Directors Stock Plan provides for the grant of nonqualified stock options, restricted stock, restricted stock units or other stock-based awards to our nonemployee directors. To date, we have not granted any incentive stock options, restricted stock or performance units. As of December31, 2009, the maximum number of new shares of common stock that were available for grant under the 2005 Stock Incentive Plan and the 2005 Directors Stock Plan was 13.5million. For awards with graded vesting, we use an accelerated expense attribution method. The compensation cost that was charged against income for stock-based awards granted under the Stock-Based Compensation Plans is as follows: For the year ended December31, 2009 2008 2007 (in millions) Compensation cost $ 48.8 $ 31.7 $ 65.2 Related income tax benefit 15.5 10.0 21.5 Capitalized as part of an asset 3.7 4.7 4.0 Nonqualified Stock Options Nonqualified stock options were granted to certain employees under the 2005 Stock Incentive Plan and the Stock Incentive Plan. Options outstanding under the 2005 Stock Incentive Plan and the Stock Incentive Plan were granted at an exercise price equal to the fair market value of our common stock on the date of grant, and expire ten years after the grant date. These options have graded or cliff vesting over a three-year period, except in the case of approved retirement. Total options granted under the 2005 Stock Incentive Plan and the Stock Incentive Plan were 2.2million, 1.6million and 1.8million for the years ended December31, 2009, 2008 and 2007, respectively. Nonqualified stock options granted under the Directors stock plans have an exercise price equal to the fair market value of our common stock on the date of the grant and a contractual term equal to the earlier of five years from the date the participant ceases to provide service or the tenth anniversary of the date the option was granted. Beginning with the 2003 grant, options become exercisable in four approximately equal installments on the three, six and nine month anniversaries of the grant date, and on the date that the Director's full term of office expires. There were no options granted during the years ended December31, 2009, 2008 and 2007. The following is a summary of the status of all of our stock option plans for the year ended December31, 2009:

Earnings Per Common Share

Earnings Per Common Share
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Earnings Per Common Share	19. Earnings Per Common Share The computations of the basic and diluted per share amounts for our continuing operations were as follows: For the year ended December31, 2009 2008 2007 (in millions, except per share data) Income from continuing operations, net of related income taxes $ 645.7 $ 465.8 $ 864.3 Subtract: Income from continuing operations, net of related income taxes attributable to noncontrolling interest 23.0 7.7 24.2 Preferred stock dividends 33.0 33.0 33.0 Income from continuing operations available to common stockholders, net of related income taxes $ 589.7 $ 425.1 $ 807.1 Weighted-average shares outstanding: Basic 297.3 259.3 265.4 Dilutive effects: Stock options 0.4 1.1 2.3 Performance share awards 0.4 Restricted stock units 1.2 0.3 0.4 Diluted 298.9 261.1 268.1 Income from continuing operations per common share: Basic $ 1.98 $ 1.64 $ 3.04 Diluted $ 1.97 $ 1.63 $ 3.01 The calculation of diluted earnings per share for the years ended December31, 2009, 2008 and 2007, excludes the incremental effect related to certain outstanding stock-based compensation grants due to their anti-dilutive effect.

Quarterly Results of Operations

Quarterly Results of Operations (Unaudited)
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Quarterly Results of Operations (Unaudited)	20. Quarterly Results of Operations (Unaudited) The following is a summary of unaudited quarterly results of operations for 2009 and 2008: For the three months ended December31 September30 (1) June30 March31 (in millions, except per share data) 2009 Total revenues $ 2,232.4 $ 2,270.3 $ 2,157.8 $ 2,188.6 Total expenses 2,062.9 2,022.0 1,959.9 2,058.5 Income from continuing operations, net of related income taxes 154.9 204.2 164.0 122.6 Net income available to common stockholders 141.9 184.7 150.3 112.8 Basic earnings per common share for income from continuing operations, net of related income taxes 0.44 0.58 0.52 0.43 Basic earnings per common share for net income available to common stockholders 0.44 0.58 0.52 0.43 Diluted earnings per common share for income from continuing operations, net of related income taxes 0.44 0.57 0.52 0.43 Diluted earnings per common share for net income available to common stockholders 0.44 0.57 0.52 0.43 2008 Total revenues $ 2,279.3 $ 2,497.8 $ 2,658.1 $ 2,500.7 Total expenses 2,344.2 2,391.3 2,445.6 2,293.5 Income (loss) from continuing operations, net of related income taxes (3.6 ) 108.7 183.1 177.6 Net income (loss) available to common stockholders (7.5 ) 90.1 168.3 174.2 Basic earnings (loss) per common share for income from continuing operations, net of related income taxes (0.03 ) 0.35 0.65 0.67 Basic earnings (loss) per common share for net income available to common stockholders (0.03 ) 0.35 0.65 0.67 Diluted earnings (loss) per share for income from continuing operations, net of related income taxes (0.03 ) 0.35 0.64 0.67 Diluted earnings (loss) per common share for net income available to common stockholders (0.03 ) 0.35 0.64 0.67 (1) During the third quarter of 2009, we discovered a prior period error related to DPAC amortization of certain contracts in our full service accumulation business. We evaluated the materiality of the error from qualitative and quantitative perspectives and concluded it was not material to any prior periods. The correction of the error in the third quarter of 2009 could be considered material to the results of operations for the three months ended September30, 2009, but is not material to the results of operations for the nine months ended September30, 2009. Accordingly, we made an adjustment in the third quarter of 2009 that resulted in a decrease in DPAC amortization expense. On an after-tax basis, the adjustment for prior periods resulted in an $18.9million increase in net income for the three months ended September30, 2009.

Condensed Consolidating Financi

Condensed Consolidating Financial Information
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Condensed Consolidating Financial Information	21. Condensed Consolidating Financial Information Principal Life has established special purpose entities to issue secured medium-term notes. Under the program, the payment obligations of principal and interest on the notes are secured by funding agreements issued by Principal Life. Principal Life's payment obligations on the funding agreements are fully and unconditionally guaranteed by PFG. All of the outstanding stock of Principal Life is indirectly owned by PFG and PFG is the only guarantor of the payment obligations of the funding agreements. The following tables set forth condensed consolidating financial information of (i)PFG, (ii)Principal Life, (iii)Principal Financial Services,Inc. ("PFS") and all other direct and indirect subsidiaries of PFG on a combined basis and (iv)the eliminations necessary to arrive at the information for PFG on a consolidated basis as of December31, 2009 and December31, 2008, and for the years ended December31, 2009, 2008 and 2007. In presenting the condensed consolidating financial statements, the equity method of accounting has been applied to (i)PFG's interest in PFS, (ii)Principal Life's interest in all direct subsidiaries of Principal Life and (iii)PFS's interest in Principal Life even though all such subsidiaries meet the requirements to be consolidated under U.S.GAAP. Earnings of subsidiaries are, therefore, reflected in the parent's investment and earnings. All intercompany balances and transactions, including elimination of the parent's investment in subsidiaries, between PFG, Principal Life and PFS and all other subsidiaries have been eliminated, as shown in the column "Eliminations and Other." These condensed consolidating financial statements should be read in conjunction with the consolidated financial statements. The financial information may not necessarily be indicative of results of operations, cash flows or financial position had the subsidiaries operated as independent entities. Condensed Consolidating Statements of Financial Position December31, 2009 Principal Financial Group,Inc. Parent Only Principal Life Insurance Company Only Principal Financial Services,Inc. and Other Subsidiaries Combined Eliminations Principal Financial Group,Inc. Consolidated (in millions) Assets Fixed maturities, available-for-sale $ 124.5 $ 40,928.8 $ 5,635.5 $ (468.2 ) $ 46,220.6 Fixed maturities, trading 348.1 461.8 222.5 1,032.4 Equity securities, available-for-sale 211.6 2.4 214.0 Equity securities, trading 0.3 221.2 221.5 Mortgage loans 9,930.7 2,344.5 (429.6 ) 11,845.6 Real estate 19.4 1,017.4 (2.2 ) 1,034.6 Policy loans 881.3 21.2 902.5 Investment in unconsolidated entities 8,423.1 3,337.7 3,193.6 (14,326.1 ) 628.3 Other investments 5.3 1,692.3 730.4 (591.0 ) 1,837.0 Cash and cash equivalents 304.6 1,249.2 854.3 (167.7 ) 2,240.4 Accrued investment income 2.0 634.6 61.2 (5

Schedule I --Summary of Investm

Schedule I --Summary of Investments --Other Than Investments in Related Parties
	12 Months Ended Dec. 31, 2009 USD / shares
Financial Statement Schedules
Schedule I -- Summary of Investments -- Other Than Investments in Related Parties	ScheduleI Summary of Investments Other Than Investments in Related Parties As of December31, 2009 Type of Investment Cost Value Amount as shown in the Consolidated Statement of Financial Position (in millions) Fixed maturities, available-for-sale: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 550.1 $ 558.7 $ 558.7 States, municipalities and political subdivisions 2,008.7 2,048.6 2,048.6 Foreign governments 741.5 854.9 854.9 Public utilities 4,338.5 5,908.1 5,908.1 Redeemable preferred stock 108.0 99.5 99.5 All other corporate bonds 28,320.5 26,923.2 26,923.2 Residential mortgage-backed securities 3,049.5 3,133.1 3,133.1 Commercial mortgage-backed securities 4,898.0 3,599.7 3,599.7 Collateralized debt obligations 607.5 369.6 369.6 Other debt obligations 2,994.1 2,725.2 2,725.2 Total fixed maturities, available-for-sale 47,616.4 46,220.6 46,220.6 Fixed maturities, trading 1,032.4 1,032.4 1,032.4 Equity securities, available-for-sale: Common stocks: Banks, trust and insurance companies 12.1 18.9 18.9 Industrial, miscellaneous and all other 9.1 15.0 15.0 Non-redeemable preferred stock 209.9 180.1 180.1 Total equity securities, available-for-sale 231.1 214.0 214.0 Equity securities, trading 221.5 221.5 221.5 Mortgage loans(1) 12,008.2 XXXX 11,845.6 Real estate, net: Real estate acquired in satisfaction of debt 114.1 XXXX 113.5 Other real estate(2) 921.1 XXXX 921.1 Policy loans 902.5 XXXX 902.5 Other investments(3) 1,482.2 XXXX 2,465.3 Total investments $ 64,529.5 $ XXXX $ 63,936.5 (1) The amount shown in the Consolidated Statement of Financial Position for mortgage loans differs from cost as mortgage loans are generally reported at cost adjusted for amortization of premiums and accrual of discounts, computed using the interest method and net of valuation allowances. (2) The amounts shown in the Consolidated Statement of Financial Position for real estate differ from cost due to properties that were determined to be impaired. The cost bases of these properties are reduced to fair value. Real estate expected to be disposed is carried at the lower of cost or fair value, less cost to sell, with valuation allowances established. (3) The amount shown in the Consolidated Statement of Financial Position for other investments differs from cost due to accumulated earnings from minority interests in unconsolidated entities and properties owned jointly with venture partners and operated by the partners. Other investments also includes derivative assets and certain seed money investments, which are reported at fair value.

Schedule II -- Condensed Financ

Schedule II -- Condensed Financial Information of Registrant (Parent Only)
	12 Months Ended Dec. 31, 2009 USD / shares
Financial Statement Schedules
Schedule II -- Condensed Financial Information of Registrant (Parent Only)	ScheduleII Condensed Financial Information of Registrant (Parent Only) Statements of Financial Position December31, 2009 2008 (in millions) Assets Fixed maturities, available-for-sale $ 124.5 $ Fixed maturities, trading 348.1 Cash and cash equivalents 304.6 (2.0 ) Other investments 5.3 5.5 Income taxes receivable 14.7 9.1 Deferred income taxes 27.0 39.4 Amounts receivable from subsidiary 0.8 0.9 Other assets 16.2 27.0 Investment in subsidiary 8,423.1 3,101.8 Total assets $ 9,264.3 $ 3,181.7 Liabilities Amounts payable to subsidiary $ 2.8 $ 2.3 Long-term debt 1,351.8 601.8 Accrued interest payable 16.1 7.7 Other liabilities 0.1 97.1 Total liabilities 1,370.8 708.9 Stockholders' equity SeriesA preferred stock, par value $.01 per share with liquidation preference of $100 per share 3.0million shares authorized, issued and outstanding at December31, 2009 and 2008 SeriesB preferred stock, par value $.01 per share with liquidation preference of $25 per share 10.0million shares authorized, issued and outstanding at December31, 2009 and 2008 0.1 0.1 Common stock, par value $.01 per share 2,500.0million shares authorized, 447.0million and 387.0million shares issued, and 319.0million and 259.3million shares outstanding at December31, 2009 and 2008, respectively 4.5 3.9 Additional paid-in capital 9,492.9 8,376.5 Retained earnings 4,160.7 3,722.5 Accumulated other comprehensive loss (1,042.0 ) (4,911.6 ) Treasury stock, at cost (128.0million and 127.7million shares at December31, 2009 and 2008, respectively) (4,722.7 ) (4,718.6 ) Total stockholders' equity attributable to Principal Financial Group,Inc. 7,893.5 2,472.8 Total liabilities and stockholders' equity $ 9,264.3 $ 3,181.7 See accompanying notes. Statements of Operations For the year ended December31, 2009 2008 2007 (in millions) Revenues Net investment income (loss) $ 3.6 $ (0.3 ) $ 6.8 Net realized capital gains (losses) 0.1 (1.8 ) Total revenues 3.7 (2.1 ) 6.8 Expenses Other operating costs and expenses 90.8 48.0 48.0 Total expenses 90.8 48.0 48.0 Loss before income taxes (87.1 ) (50.1 ) (41.2 ) Income tax benefits (34.7 ) (20.0 ) (17.4 ) Equity in the net income of subsidiaries, excluding discontinued operations 675.1 488.2 863.9 Income from continuing operations, net of related income taxes 622.7 458.1 840.1 Income from discontinued operations, net of related income taxes 20.2 Net income attributable to Principal Financial Group,Inc. 622.7 458.1 860.3 Preferred stock divi

Schedule III -- Supplementary I

Schedule III -- Supplementary Insurance Information
	12 Months Ended Dec. 31, 2009 USD / shares
Financial Statement Schedules
Schedule III -- Supplementary Insurance Information	ScheduleIII Supplementary Insurance Information As of December31, 2009 and 2008 and for each of the years ended December31, 2009, 2008 and 2007 Segment Deferred policy acquisition costs Future policy benefits and claims Contractholder and other policyholder funds (in millions) 2009: U.S. Asset Accumulation $ 1,552.2 $ 8,274.1 $ 36,398.9 Global Asset Management International Asset Management and Accumulation 226.5 3,303.9 53.2 Life and Health Insurance 1,902.7 7,668.3 4,166.0 Corporate 2.0 (257.0 ) Total $ 3,681.4 $ 19,248.3 $ 40,361.1 2008: U.S. Asset Accumulation $ 1,837.4 $ 8,344.8 $ 39,983.6 Global Asset Management International Asset Management and Accumulation 182.9 2,520.0 57.9 Life and Health Insurance 2,132.7 7,626.9 3,833.3 Corporate 2.5 (252.0 ) Total $ 4,153.0 $ 18,494.2 $ 43,622.8 ScheduleIII Supplementary Insurance Information (continued) As of December31, 2009 and 2008 and for each of the years ended December31, 2009, 2008 and 2007 Segment Premiums and other considerations Net investment income (1) Benefits, claims and settlement expenses Amortization of deferred policy acquisition costs Other operating expenses (1) (in millions) 2009: U.S. Asset Accumulation $ 247.2 $ 2,491.2 $ 2,185.1 $ 54.0 $ 1,019.5 Global Asset Management 9.6 376.1 International Asset Management and Accumulation 239.1 209.0 328.5 (1.7 ) 115.8 Life and Health Insurance 3,257.2 644.1 2,832.4 39.9 934.9 Corporate 7.1 46.9 (11.5 ) (11.9 ) Total $ 3,750.6 $ 3,400.8 $ 5,334.5 $ 92.2 $ 2,434.4 2008: U.S. Asset Accumulation $ 523.2 $ 2,778.5 $ 2,723.2 $ 243.1 $ 1,188.9 Global Asset Management (16.6 ) 454.1 International Asset Management and Accumulation 204.1 521.5 585.9 (1.3 ) 153.8 Life and Health Insurance 3,476.1 669.3 2,921.8 131.9 989.5 Corporate 5.8 41.6 (11.0 ) (172.6 ) Total $ 4,209.2 $ 3,994.3 $ 6,219.9 $ 373.7 $ 2,613.7 2007: U.S. Asset Accumulation $ 710.8 $ 2,735.5 $ 2,807.7 $ 255.0 $ 1,246.8 Global Asset Management 35.2 424.1 International Asset Management and Accumulation 246.4 413.4 526.7 5.9 134.5 Life and Health Insurance 3,671.6 689.1 3,111.4 96.4 1,031.7 Corporate 5.3 93.3 (10.5 ) (89.4 ) Total $ 4,634.1 $ 3,966.5 $ 6,435.3 $ 357.3 $ 2,747.7 (1) Allocations of net investment income and certain operating expenses ar

Schedule IV -- Reinsurance

Schedule IV -- Reinsurance
	12 Months Ended Dec. 31, 2009 USD / shares
Financial Statement Schedules
Schedule IV -- Reinsurance	ScheduleIV Reinsurance As of December31, 2009, 2008 and 2007 and for each of the years then ended Gross amount Ceded to other companies Assumed from other companies Net amount Percentage of amount assumed to net (in millions) 2009: Life insurance in force $ 237,454.2 $ 76,507.1 $ 2,328.2 $ 163,275.3 1.4 % Premiums: Life insurance $ 1,389.6 $ 140.5 $ 5.2 $ 1,254.3 0.4 % Accident and health insurance 2,658.0 161.7 2,496.3 % Total $ 4,047.6 $ 302.2 $ 5.2 $ 3,750.6 0.1 % 2008: Life insurance in force $ 243,735.9 $ 71,284.2 $ 2,593.2 $ 175,044.9 1.5 % Premiums: Life insurance $ 1,675.5 $ 121.6 $ 9.7 $ 1,563.6 0.6 % Accident and health insurance 2,819.6 174.0 2,645.6 % Total $ 4,495.1 $ 295.6 $ 9.7 $ 4,209.2 0.2 % 2007: Life insurance in force $ 240,295.8 $ 62,552.2 $ 2,823.5 $ 180,567.1 1.6 % Premiums: Life insurance $ 1,774.9 $ 108.4 $ 160.1 $ 1,826.6 8.8 % Accident and health insurance 2,976.4 168.8 (0.1 ) 2,807.5 % Total $ 4,751.3 $ 277.2 $ 160.0 $ 4,634.1 3.5 %

Document and Entity Information

Document and Entity Information (USD $)
	12 Months Ended Dec. 31, 2009	Feb. 10, 2010	Jun. 30, 2009
Document and Entity Information
Entity Registrant Name	PRINCIPAL FINANCIAL GROUP INC
Entity Central Index Key	0001126328
Document Type	10-K
Document Period End Date	2009-12-31
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$5,996,750,108
Entity Common Stock, Shares Outstanding		319,465,252