The Principal Financial Group Supports Reintroduction of Optional Federal Charter Legislation

The Principal Financial Group®, the nation’s 401(k) leader and premier provider of employee benefits, strongly endorses the "National Insurance Act of 2007” and commends Tim Johnson (D-SD) and John Sununu (R-NH) for their bipartisan leadership. The proposed legislation suggests the creation of an optional federal charter, which would allow insurers and agents the choice between exclusive federal or state regulation and provide a streamlined regulatory structure with consistent laws, regulations and consumer protections. "The Principal is encouraged that OFC legislation is being reintroduced. As a large insurer and retirement services provider, we see the adverse impact that a 50-state system has on consumers and our sales force,” said J. Barry Griswell, chairman and CEO of the Principal Financial Group. "If customers move from state to state, they must seek out a new financial representative to help with insurance planning. Having an optional federal charter in place will allow agents to work across state lines, which benefits them and their client.” Improved Speed-to-Market Life insurance products can take up to two years to go through the state-by-state approval process. National banks, however, don’t need explicit regulatory approval to bring most new products to market on a nationwide basis. Securities firms typically get regulatory approval for new products in three to four months from a single regulator. "Life insurance products that may help secure the financial futures of working Americans are delayed to the market due to required costly and time-consuming regulatory steps of the current system,” noted Griswell. "Allowing a federal option would increase speed-to-market of insurance products, and create fair competition between insurers, banks and mutual fund companies that will only benefit the consumer.” International Implications The current system of state insurance regulation was developed in the 1940s. "Unlike banking and securities regulatory systems, the insurance industry has not been modernized. Insurers with global operations, like The Principal, need a federal regulator experienced in the international financial services marketplace,” said Larry Zimpleman, president and COO of The Principal®. "Today’s 50 state regulatory structure does not include a single person or entity that speaks for the U.S. insurance industry as a whole when international trade negotiations begin. Having an OFC in place would bring focus to the industry and provide U.S. insurance companies more opportunity in international markets.” The legislation would establish an Office of National Insurance (ONI) within the U.S. Treasury Department that would be responsible for regulating the solvency and market conduct of federally-chartered insurers. The legislation mandates a Division of Consumer affairs and a consumer ombudsman within the ONI to specifically address consumer issues, questions and concerns. States would retain the right to collect and retain premium tax income. Funding the ONI would come from fees and assessments on insurers, agencies and brokerages, similar to the way the Securities and Exchange Commission receives its funding. "The Principal looks forward to the continued progress of OFC legislation, and to the potential its passing will bring to the insurance industry, and the consumers it serves,” concluded Griswell. About the Principal Financial Group The Principal Financial Group® (The Principal®)1 is a leader in offering businesses, individuals and institutional clients a wide range of financial products and services, including retirement and investment services, life and health insurance, and banking through its diverse family of financial services companies and national network of financial professionals. A member of the Fortune 500, the Principal Financial Group has $270.1 billion in assets under management2 and serves some 17.6 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. 1 "The Principal Financial Group" and "The Principal” are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group. 2 As of March 31, 2007