·           Discussion by various commentators of annuities with living benefits, variously referred to
                as guaranteed minimum income benefits or guaranteed minimum withdrawal benefits
                ("GMWB"), has created the impression that The Principal's exposure to this risk is similar
                to that of other insurers. As CEO Larry Zimpleman explained at The Principal's third
                quarter earnings call, a significant point that distinguishes The Principal from other
                insurers is the small part GMWB plays in The Principal's business. With only $1 billion in
                this block, equity market volatility has minimal impact on the capital necessary to support
                The Principal's individual annuities business. Annuities with GMWB represented
                approximately 1/2 of 1% of The Principal's third quarter 2008 earnings.

    ·           Commentators have speculated about the possibility of agency downgrades as a reason to
                sell shares of U.S. life insurance companies. On November 7, 2008, Moody's Investors
                Service affirmed The Principal's financial strength and debt ratings, all with stable
                outlooks. In addition, Fitch affirmed The Principal's financial strength and debt ratings in
                September 2008, all with stable outlooks.

                In our third quarter earnings call, we acknowledged the possibility of downgrades in the
                insurance sector and explained that, while strong relative ratings remain important to The
                Principal, our key growth engines - U.S. Asset Accumulation, Principal Global Investors
                and Principal International - could continue to operate successfully at a lower rating,
                particularly if downgrades were industry wide.

    ·           Some reports have contained broad, negative comments about The Principal's commercial
                real estate loan portfolio. As Chief Financial Officer Terry Lillis pointed out at our third
                quarter earnings call, every single commercial mortgage loan in our $11 billion portfolio is
                performing on schedule. In releasing third quarter 2008 results, we clearly communicated
                that we anticipate defaults and losses on commercial mortgages will increase in the future.
                However, we believe the increase will occur over a period of several years, and that we
                will have the ability to accommodate these losses going forward through the use of a
                number of capital management techniques. We would like to remind investors that our