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���������ֳ�-Chicago-05 September 2008: ���������ֳ� has affirmed the ratings of Principal Financial Group Inc. (PFG) and its subsidiaries. At the same time, ���������ֳ� has assigned an 'AA' Insurer Financial Strength (IFS) rating to Principal National Life Insurance Company. The Rating Outlook for all ratings remains Stable. (See a full list of ratings below.)

PFG's ratings reflect the company's favorable operating profile, good balance sheet fundamentals, and strong earnings and cash flow.

PFG's favorable operating profile reflects the company's strong market position in the 401(k) defined contribution and employee benefit insurance businesses serving the small-to-midsized employer market. ���������ֳ� believes that PFG's strong market position is the result of the company's large operating scale, strong distribution capabilities, and well-established track record in this market. PFG also maintains a middle-tier position in the individual life and annuities markets, which provides some diversification to PFG's risk and earnings profiles.

Financial performance in 2007 was strong, including double-digit growth across a number of metrics including operating earnings and assets under management (AUM). AUM growth trends reflect existing deposit growth, acquisitions, and strong sales growth. PFG improved operating return on average equity by 1.1% to 16.4% in 2007, following 1.5% increases in each of the prior two years. Although metrics were not as strong in the first half of 2008, partially due to capital market performance, the business is still considered to exhibit good fundamentals.

Equity credit adjusted leverage was 17.8% at June 30, 2008, which is in line with ���������ֳ�'s expectations that would it not exceed 25%. PFG's financial leverage ratio reflects 100% equity credit for PFG's $542 million of perpetual preferred shares.

���������ֳ� views the current capital levels of PFG's life insurance subsidiaries as approaching the lower end of rating expectations. Combined statutory total adjusted capital (TAC) for PFG totaled $4.7 billion at June 30, 2008, which is 3% more than year-end 2007 and 5% more than $4.5 billion at year-end 2006. However, general account liabilities grew 11% from year-end 2006, causing an increase in operating leverage. PFG had a Prism capital score of 106% of the 'AAA' threshold based on year-end 2006 capital and liability levels. ���������ֳ� expects PFG to maintain a Prism capital score near the 'AAA' threshold. Principal Life Insurance Company, PFG's lead operating company, reported a Risk Based Capital (RBC) ratio of 377% at year-end 2007, down from 419% at year-end 2006.

���������ֳ�'s primary rating concern for PFG is the company's exposure to further credit losses due to the ongoing credit market turmoil, and its impact on the company's risk-based capital levels. PFG recorded a $1.6 billion increase in gross unrealized capital losses in the first six months of 2008, primarily on mortgage-related and fixed-maturity corporate securities. The possibility of a portion of these losses moving to a permanent impaired status would have a negative effect on TAC.

PFG's exposure to residential mortgage-related investments is material at about 8% of total investments; however, the majority of these investments are in relatively stable higher-rated agency securities and performing whole loans. Exposure to riskier structured residential mortgage securities at 2% of total investments (including a 1% exposure to subprime and Alt-a related investments) is below average relative to peers and is manageable. Likewise, PFG's above-average exposure to commercial mortgage-related investments of 24% of total investments is mostly in whole loans that are performing well. Commercial mortgage backed securities (CMBS) of 8% of total investments have experienced credit deterioration in 2008, but this appears to be mostly related to market dynamics versus specific credit issues.

PFG's below-investment-grade security exposure is considered manageable at 5% of the fixed maturity portfolio or 49% of TAC at June 30, 2008. However, ���������ֳ� notes that industry write-downs have the potential to spread to higher rated securities, creating adverse financial effects for the company in the second half of 2008.

���������ֳ� affirms the following ratings:

Principal Financial Group:

--Issuer Default Rating (IDR) at 'A+';
--$600 million 6.05% due Oct. 15, 2036 at 'A'
--5.563% preferred stock due 2015, series A at 'A-';
--6.518% preferred stock due 2035, series B at 'A-'.

Principal Financial Services Inc.:

--IDR at 'A+';
--Senior debt rating at 'A';
--$465 million 8.2% due Aug. 15, 2009 at 'A'
--Commercial paper at 'F1'.

Insurance subsidiaries:

Principal Life Insurance Company

--IFS at 'AA';
--IDR at 'AA-';
--Surplus notes at 'A+';
--$100 million due March 1, 2044 at 'A+'.

In addition, ���������ֳ� affirms the following funding agreement-backed notes issuance programs and their outstanding issues at 'AA':

Principal Financial Global Funding LLC
Principal Life Income Fundings Trust
Principal Life Global Funding I
Principal Financial Global Funding II, LLC

A new IFS rating of 'AA' is assigned to Principal National Life Insurance Company.

Contact: Bruce Cox +1-312-606-2316 or Julie Burke +1-312-368-3158, Chicago.

Media Relations: Sandro Scenga, New York, Tel: +1 212-908-0278.