Exhibit 1.1


       3,000,000 SHARES, SERIES A NON-CUMULATIVE PERPETUAL PREFERRED STOCK
      10,000,000 SHARES, SERIES B NON-CUMULATIVE PERPETUAL PREFERRED STOCK

                         PRINCIPAL FINANCIAL GROUP, INC.

                             UNDERWRITING AGREEMENT


June 14, 2005

LEHMAN BROTHERS INC.
  As Representative of the
  several underwriters named in Schedule I hereto
c/o LEHMAN BROTHERS INC.
745 Seventh Avenue
New York, NY  10019

Ladies and Gentlemen:

      Principal Financial Group Inc., a Delaware corporation ("the Company"),
proposes to issue and sell to you and the other underwriters named in Schedule I
hereto (the "Underwriters"), for whom you are acting as representative (the
"Representative"), the number of shares identified in Schedule I hereto of the
Company's Series A Non-Cumulative Perpetual Preferred Stock, par value $0.01 per
share (the "Series A Preferred Stock") and the Company's Series B Non-Cumulative
Perpetual Preferred Stock, par value $0.01 per share (the "Series B Preferred
Stock", and together with the Series A Preferred Stock, the "Preferred Stock").
This is to confirm the agreement concerning the purchase of the Preferred Stock
from the Company by the Underwriters named in Schedule I hereto.

SECTION 1. Representations and Warranties. The Company represents and warrants
to each Underwriter that:

      (a) The Company meets the requirements for the use of Form S-3 under the
Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations promulgated thereunder (the "Rules"), and has prepared and filed
with the Securities and Exchange Commission (the "Commission") a registration
statement on Form S-3 (the file number of which is set forth in Schedule I
hereto), for the registration of the Preferred Stock under the Securities Act,
which Registration Statement has become effective and no stop order suspending
the effectiveness of the Registration Statement (as defined below) has been
issued under the Securities Act and no proceedings for that purpose have been
instituted or are pending or, to its knowledge, are threatened by the
Commission, and any request by the Commission for additional information has
been complied with. The Registration Statement meets the requirements set forth
in Rule 415(a)(1)(x) under the Securities Act and complies in all other material
respects with such rule. The Company proposes to file with the Commission
pursuant to Rule 424 under the Securities

Act ("Rule 424") a supplement to the form of prospectus included in the
registration statement relating to the initial offering of the Preferred Stock
and the plan of distribution thereof and has previously advised you of all
further information (financial and other) with respect to the Company to be set
forth therein. The term "Registration Statement" means the registration
statement, as amended at the date of this Agreement, including the exhibits
thereto, financial statements, and all documents incorporated therein by
reference pursuant to Form S-3 (the "Incorporated Documents"), and such
prospectus as then amended, including the Incorporated Documents, is hereinafter
referred to as the "Basic Prospectus"; such supplemented form of prospectus with
respect to the offering of the Series A Preferred Stock, in the form in which it
shall be filed with the Commission pursuant to Rule 424 (including the Basic
Prospectus as so supplemented), is hereinafter called the "Series A Final
Prospectus"; such supplemented form of prospectus with respect to the offering
of the Series B Preferred Stock, in the form in which it shall be filed with the
Commission pursuant to Rule 424 (including the Basic Prospectus as so
supplemented), is hereinafter called the "Series B Final Prospectus"; and the
Series A Final Prospectus and the Series B Final Prospectus is each a "Final
Prospectus" and are herein together called the "Final Prospectuses". Any
preliminary form of a Final Prospectus which has heretofore been filed pursuant
to Rule 424 is hereinafter called an "Interim Prospectus". Any reference herein
to the Registration Statement, the Basic Prospectus, any Interim Prospectus or
either Final Prospectus shall be deemed to refer to and include the Incorporated
Documents which were filed under the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder
(the "Exchange Act"), on or before the date of this Agreement or the issue date
of the Basic Prospectus, any Interim Prospectus or such Final Prospectus, as the
case may be; and any reference herein to the terms "amend", "amendment" or
"supplement" with respect to the Registration Statement, the Basic Prospectus,
any Interim Prospectus or either Final Prospectus shall be deemed to refer to
and include the filing of any Incorporated Documents under the Exchange Act
after the date of this Agreement or the issue date of the Basic Prospectus, any
Interim Prospectus or such Final Prospectus, as the case may be, and deemed to
be incorporated therein by reference. Copies of the Registration Statement and
each of the amendments thereto have been delivered by the Company to you as
Representative of the Underwriters. If the Company has filed an abbreviated
registration statement to register additional shares of Preferred Stock pursuant
to Rule 462(b) under the Securities Act (the "Rule 462 Registration Statement"),
then any reference herein to the term "Registration Statement" shall be deemed
to include such Rule 462 Registration Statement. The Commission has not issued
any order preventing or suspending the use of any Interim Prospectus.

      (b) As of the date hereof, when the Final Prospectuses are first filed
with the Commission pursuant to Rule 424, when, before the Delivery Date
(hereinafter defined), any amendment to the Registration Statement becomes
effective, when, before the Delivery Date, any Incorporated Document is filed
with the Commission, when any supplement to either Final Prospectus is filed
with the Commission and at the Delivery Date, the Registration Statement, such
Final Prospectus and any such amendment or supplement will comply in all
material respects with the applicable requirements of the


                                       2

Securities Act and the Rules, and the Incorporated Documents will comply in all
material respects with the requirements of the Exchange Act, or the Securities
Act and the Rules, as applicable, and on the date it became effective, the
Registration Statement did not, and, on the date that any post-effective
amendment to the Registration Statement becomes effective, the Registration
Statement as amended by such post-effective amendment did not or will not, as
the case may be, contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading; on the date the Final Prospectuses are filed
with the Commission pursuant to Rule 424 and on the Delivery Date, each Final
Prospectus, as it may be amended or supplemented, will not include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they are made, not misleading; and on said dates, the Incorporated Documents
will comply in all material respects with the applicable provisions of the
Exchange Act, and, when read together with each Final Prospectus, or such Final
Prospectus as it may be then amended or supplemented, will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading; provided that the
foregoing representations and warranties in this paragraph (b) shall not apply
to statements or omissions made in reliance upon and in conformity with written
information furnished to the Company by or through the Representative(s) on
behalf of any Underwriter specifically for use in connection with the
preparation of the Registration Statement or such Final Prospectus, as they may
be amended or supplemented.

      (c) Each of Principal Financial Services, Inc., an Iowa business
corporation ("Principal Financial"), Principal Life Insurance Company, an Iowa
insurance company ("PLIC"), and Principal Global Investors LLC, a Delaware
limited liability company ("Principal Investors", and together with Principal
Financial and PLIC, the "Significant Subsidiaries"), is a "significant
subsidiary", as such term is defined in Rule 405 of the Rules, and the Company
has no other subsidiary that is a "significant subsidiary" within the meaning of
such Rule.

      (d) Each of the Company and its Significant Subsidiaries has been duly
incorporated and is validly existing as a corporation, partnership or limited
partnership, as applicable, and is in good standing under the laws of its
jurisdiction, with power and authority (corporate and other) to own its
properties and conduct its business as described in each Final Prospectus; the
Company is duly qualified to do business as a foreign corporation and is in good
standing under the laws of each other jurisdiction in which its ownership or
lease of property or the conduct of its business requires such qualification, or
is subject to no material liability or disability by reason of the failure to be
so qualified and in good standing in any such jurisdiction; and each subsidiary
of the Company is duly qualified to do business as a foreign corporation,
partnership or limited partnership, as applicable, and is in good standing under
the laws of each other jurisdiction in which its ownership or lease of property
or the conduct of its business requires such qualification and good standing,
except where the failure to be so qualified would not


                                       3

have a material adverse effect on the general affairs, business, management,
financial position, surplus, reserves, stockholders' equity or results of
operations of the Company and its subsidiaries considered as a whole ("Material
Adverse Effect").

      (e) Each of the Company and its subsidiaries that are required to be
organized and licensed or registered as an insurance or an insurance holding
company (collectively, the "Insurance Entities") is duly organized and licensed
or registered as an insurance or insurance holding company, as the case may be,
in its jurisdiction of incorporation, and, in the case of an insurance company,
is duly licensed or authorized in each other jurisdiction where it is required
to be so licensed or authorized to conduct its business and all such licenses or
authorizations are in full force and effect with such exceptions as would not
have, individually or in the aggregate, a Material Adverse Effect; provided,
however, that in the case of PLIC's insurance license in the State of Iowa and
the Company's insurance holding company registration in the State of Iowa, such
license and such registration are in full force and effect in all respects.
Except as otherwise described in each of the Final Prospectuses, each of the
Insurance Entities has all other approvals, orders, consents, authorizations,
licenses, certificates, permits, registrations and qualifications (collectively,
the "Approvals") of and from all insurance and regulatory authorities, as the
case may be, to conduct its business, with such exceptions as would not have,
individually or in the aggregate, a Material Adverse Effect, and all such
Approvals are in full force and effect except where the failure of such
Approvals to be in full force and effect would not have, individually or in the
aggregate, a Material Adverse Effect. There is no pending or, to the knowledge
of the Company after due inquiry, threatened action, suit, proceeding or
investigation that could reasonably be expected to lead to the revocation,
termination, suspension or limitation of any such Approval or otherwise impose
any limitation on the conduct of business of any Insurance Entity, the
revocation, termination or suspension of which would have, individually or in
the aggregate, a Material Adverse Effect, and, to the knowledge of the Company
after due inquiry, no insurance regulatory agency or body has issued any order
or decree impairing, restricting or prohibiting the payment of dividends by any
Insurance Entity. Except as otherwise described in each of the Final
Prospectuses, none of the Insurance Entities has received any notification from
any applicable regulatory authority to the effect that any additional Approvals
from such regulatory authority are needed to be obtained by such Insurance
Entity in any case where it could be reasonably expected that (i) any of the
Insurance Entities would in fact be required either to obtain any such
additional Approvals or cease or otherwise limit engaging in certain business
and (ii) the failure to have such Approvals or limiting such business would
have, individually or in the aggregate, a Material Adverse Effect. Each of the
Company and its Insurance Entities is in compliance with all applicable
insurance laws, rules, regulations, orders, bylaws and similar requirements
which are applicable to it, and has filed all notices, reports, documents or
other information required to be filed thereunder, in each case with such
exceptions as would not have, individually or in the aggregate, a Material
Adverse Effect.

      (f) Each of the Company and its subsidiaries that is engaged in the
business of acting as a bank, broker-dealer or an investment advisor
(respectively, a "Bank


                                       4

Subsidiary", a "Broker-Dealer Subsidiary" and "Investment Advisor Subsidiary")
is duly licensed or registered as a bank, broker-dealer or investment advisor,
as the case may be, in each jurisdiction where it is required to be so licensed
or registered to conduct its business, in each case with such exceptions as
would not have, individually or in the aggregate, a Material Adverse Effect.
Each Bank Subsidiary, Broker-Dealer Subsidiary and Investment Advisor Subsidiary
has all other necessary Approvals of and from all applicable regulatory
authorities, including any self-regulatory organization, to conduct its
businesses, in each case with such exceptions as would not have, individually or
in the aggregate, a Material Adverse Effect. There is no pending or, to the
knowledge of the Company after due inquiry, threatened action, suit, proceeding
or investigation that could reasonably be expected to lead to the revocation,
termination, suspension or limitation of any such Approval or otherwise impose
any limitation on the conduct of business of any Bank Subsidiary, Broker-Dealer
Subsidiary or Investment Advisor Subsidiary, the revocation, termination or
suspension of which would have, individually or in the aggregate, a Material
Adverse Effect. Except as otherwise described in each of the Final Prospectuses,
none of the Bank Subsidiaries, Broker-Dealer Subsidiaries or Investment Advisor
Subsidiaries has received any notification from any applicable regulatory
authority to the effect that any additional Approvals from such regulatory
authority are needed to be obtained by such Bank Subsidiary, Broker-Dealer
Subsidiary or Investment Advisor Subsidiary in any case where it could be
reasonably expected that (i) any of the Bank Subsidiaries, Broker-Dealer
Subsidiaries or Investment Advisor Subsidiaries would in fact be required either
to obtain any such additional Approvals or cease or otherwise limit engaging in
certain business and (ii) the failure to have such Approvals or limiting such
business would have, individually or in the aggregate, a Material Adverse
Effect; and each Bank Subsidiary, Broker-Dealer Subsidiary and Investment
Advisor Subsidiary is in compliance with the requirements of the banking,
broker-dealer and investment advisor laws and regulations of each jurisdiction
which are applicable to such subsidiary, and has filed all notices, reports,
documents or other information required to be filed thereunder, in each case
with such exceptions as would not have, individually or in the aggregate, a
Material Adverse Effect.

      (g) The Company has an authorized capitalization as set forth in each of
the Final Prospectuses. All of the issued and outstanding shares of capital
stock of the Company have been duly authorized and validly issued, and are fully
paid and non-assessable and conform to the description thereof contained in each
of the Final Prospectuses. None of the outstanding shares of the Company's
capital stock was issued in violation of preemptive or other similar rights of
any of its security holders. All of the Company's outstanding options, warrants
and other rights to purchase or exchange any securities for shares of the
Company's capital stock have been duly authorized and validly issued and conform
to the description thereof contained in each of the Final Prospectuses. None of
the Company's outstanding options, warrants, or other rights to purchase or
exchange any securities for shares of its capital stock was issued in violation
of preemptive or other similar rights of any of its security holders. All of the
issued shares of capital stock of each subsidiary of the Company have been duly
authorized and


                                       5

validly issued and are fully paid and non-assessable and are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances, equities
or claims.

      (h) The shares of the Preferred Stock to be issued and sold by the Company
to the Underwriters hereunder have been duly and validly authorized and, when
issued and delivered against payment therefor in accordance with this Agreement,
will be duly and validly issued, fully paid and non-assessable; and the
Preferred Stock will conform to the descriptions thereof contained in each of
the Final Prospectuses. Upon payment for the shares of the Preferred Stock to be
sold by the Company on the Delivery Date pursuant to this Agreement, and the
crediting of such shares of Preferred Stock on the records of the Depository
Trust Company ("DTC") to securities accounts in the name of the Underwriters,
(A) DTC shall be a "protected purchaser" (within the meaning of Section 8-303 of
the Uniform Commercial Code as in effect in the State of New York (the "Code")),
(B) the Underwriters will acquire a valid "security entitlement" (within the
meaning of Section 8-501 of the Code) in respect of such Preferred Stock and (C)
no action based on any "adverse claim" (within the meaning of Section 8-102 of
the Code) to such Preferred Stock may be asserted against the Underwriters with
respect to such security entitlement (it being assumed that for the purposes of
this representation and warranty that when such payment, delivery and crediting
occur, (x) such Shares will have been registered in the name of Cede & Co.
("Cede") or another nominee designated by DTC, in each case on the Company's
share registry in accordance with its certificate of incorporation, by-laws and
applicable law, (y) DTC will be registered as a "clearing corporation" within
the meaning of Section 8-102 of the Code and (z) appropriate entries to the
account(s) of the Underwriters on the records of DTC will have been made
pursuant to the Code).

      (i) Each of this Agreement and the Remarketing Agreement has been duly
authorized, executed and delivered by the Company.

      (j) The issue and sale of the shares of the Preferred Stock being
delivered on the Delivery Date by the Company pursuant to this Agreement and the
execution, delivery and performance of this Agreement and the Remarketing
Agreement, to be dated as of the Delivery Date, between the Company and Lehman
Brothers Inc., as Remarketing Agent (the "Remarketing Agreement"), by the
Company and the consummation of the transactions contemplated hereby and thereby
will not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company or
its subsidiaries is a party or by which the Company or its subsidiaries is bound
or to which any of the property or assets of the Company or its subsidiaries is
subject or give the holder of any of the notes, debentures, or other evidence of
indebtedness of the Company or its subsidiaries the right to require repurchase,
redemption or repayment of all or a portion of such indebtedness by any of the
Company or its subsidiaries, or result in the creation or imposition of any
lien, charge or encumbrance upon any of the assets, properties or operations of
any of the Company or its subsidiaries, nor will such actions result in any
violation of the provisions of the


                                       6

certificate of incorporation or by-laws or similar organizational documents of
the Company or its subsidiaries or the plan of conversion of Principal Mutual
Holding Company adopted on March 31, 2001 (the "Demutualization Plan"), or any
statute or any order, rule or regulation of any court or insurance or other
regulatory agency or governmental agency or body having jurisdiction over the
Company or its subsidiaries or any of their respective properties or assets, in
each case the effect of which (other than any violation of the provisions of the
certificate of incorporation or by-laws or similar organizational documents of
the Company or any of its subsidiaries), individually or in the aggregate, would
be either to affect the validity of the Preferred Stock or their issue or affect
adversely the consummation of the transactions contemplated hereby or by the
Remarketing Agreement, or to have a Material Adverse Effect; and no notice,
consent, approval, authorization, order, registration or qualification of or
with or to any court or governmental agency or body is required for the issue
and sale of the Preferred Stock, including without limitation pursuant to the
Demutualization Plan, except for the registration of the Preferred Stock under
the Securities Act and such consents, approvals, authorizations, registrations
or qualifications as may be required under the Exchange Act, and applicable
state securities laws in connection with the purchase and distribution of the
Preferred Stock by the Underwriters and except for the filing of the
Certificates of Designations with the Delaware Secretary of State.

      (k) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the Company to
file a registration statement under the Securities Act with respect to any
securities of the Company owned or to be owned by such person or to require the
Company to include such securities in the securities registered pursuant to the
Registration Statement or in any securities being registered pursuant to any
other registration statement filed by the Company under the Securities Act.
Except as described in each of the Final Prospectuses, the holders of
outstanding shares of the Company's capital stock are not entitled to preemptive
or other rights to subscribe for the Preferred Stock.

      (l) Neither the Company nor any of its subsidiaries has sustained, since
the date of the latest audited financial statements included in each of the
Final Prospectuses, any material loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in each of the Final Prospectuses,
except for such losses or interferences as would not have, individually or in
the aggregate, a Material Adverse Effect; and, since the respective dates as of
which information is given in the Registration Statement and each of the Final
Prospectuses, there has not been any (i) (A) decrease in the outstanding capital
stock of the Company in excess of 10 million shares or (B) increase in the
consolidated long-term debt of the Company in excess of $10,000,000 or (ii) any
material adverse change, or any development involving a prospective material
adverse change, in or affecting the general affairs, business, management,
financial position, surplus, reserves, stockholders' equity or results of
operations (in each case considered either on a statutory or U.S. generally
accepted accounting principles ("GAAP") basis, as applicable) of the Company and
its


                                       7

subsidiaries, otherwise than as set forth or contemplated in each of the Final
Prospectuses.

      (m) The audited consolidated financial statements (including the related
notes and supporting schedules) filed as part of the Registration Statement or
included or incorporated by reference in each of the Final Prospectuses present
fairly in all material respects on a consolidated basis the financial condition,
the results of operations, changes in common stock and other shareholder's
equity and cash flows of the entities purported to be shown thereby, at the
dates and for the periods indicated, and have been prepared in conformity with
GAAP applied on a consistent basis throughout the periods involved. The
unaudited consolidated financial statements included in each of the Final
Prospectuses and the Registration Statement and the related notes are true,
complete and correct, subject to normally recurring changes resulting from
year-end audit adjustments, and have been prepared in accordance with the
instructions to Form 10-Q.

      (n) The statutory annual and quarterly statements of PLIC and the
statutory balance sheets and income statements included in such statutory annual
and quarterly statements, most recently filed in its domiciliary jurisdictions
have been prepared in conformity with required or permitted or prescribed
statutory accounting principles or practices applied on a consistent basis,
except as may otherwise be indicated in the notes thereto and any normal
year-end adjustments, and present fairly in all material respects the financial
position of PLIC (on a statutory basis) for the period covered thereby.

      (o) Ernst & Young LLP, who have certified certain of the financial
statements of the Company, whose report appears in each of the Final
Prospectuses and who have delivered the letters referred to in paragraphs (f)
and (g) of Section 7, are independent public accountants as required by the
Securities Act and the Rules.

      (p) Each of the Company and its subsidiaries has good and marketable title
in fee simple to all real property and good and marketable title to all personal
property owned by it, in each case free and clear of all liens, encumbrances and
defects, except such as are described in each of the Final Prospectuses or such
as would not have, individually or in the aggregate, a Material Adverse Effect
and do not materially interfere with the use made and proposed to be made of
such property by the Company or any of its subsidiaries; and any real property
and buildings held under lease by the Company and any of its subsidiaries are
held by them under valid, subsisting and enforceable leases, with such
exceptions as would not have, individually or in the aggregate, a Material
Adverse Effect and do not interfere with the use made and proposed to be made of
such property and buildings by the Company and its subsidiaries.

      (q) Each of the Company and its subsidiaries owns or possesses or can
acquire on reasonable terms adequate rights to use all material patents, patent
applications, trademarks, service marks, trade names, trademark registrations,
service mark registrations, copyrights and licenses (collectively, the
"Intellectual Property") necessary for the conduct of their respective
businesses, except where the failure to own, possess or


                                       8

have the ability to acquire such patents, rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names would not, individually or in the
aggregate, have a Material Adverse Effect, and none of the Company or any of its
subsidiaries has received any notice of infringement of or conflict with
asserted rights of others with respect to any of the foregoing which,
individually or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a Material Adverse Effect.

      (r) Other than as set forth in each of the Final Prospectuses, there are
no legal or governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property or assets of the Company or any
of its subsidiaries is the subject which, if determined adversely to the Company
or any of its subsidiaries, would, individually or in the aggregate, have a
Material Adverse Effect; and to the knowledge of the Company after due inquiry,
no such proceedings are threatened or contemplated by governmental authorities.

      (s) There are no contracts or other documents which are required to be
described in either of the Final Prospectuses or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules which have not been
described in such Final Prospectus or filed as exhibits to the Registration
Statement.

      (t) None of the Company or any of its subsidiaries is in violation of its
certificate of incorporation or by-laws or similar organizational documents; and
none of the Company or any of its subsidiaries is in default in the performance
or observance of any obligation, agreement, covenant or condition contained in
any indenture, mortgage, deed of trust, loan agreement, lease or other agreement
or instrument to which it is a party or by which it or any of its properties may
be bound or any judgment, order or decree of any governmental body, agency or
court having jurisdiction over the Company or any of its subsidiaries, which
violation or default would have, individually or in the aggregate, a Material
Adverse Effect.

      (u) The Company and its subsidiaries (i) are in compliance with any and
all applicable foreign, Federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("Environmental Laws"),
(ii) have received all approvals required of them under applicable Environmental
Laws to conduct their respective businesses, and (iii) are in compliance with
all terms and conditions of any such approval, except where such noncompliance
with Environmental Laws, failure to receive required approvals or failure to
comply with the terms and conditions of such approvals would not, individually
or in the aggregate, have a Material Adverse Effect.

      (v) Neither of the Company nor any of its subsidiaries is, or as of the
Delivery Date will be, an "investment company" as defined in the Investment
Company Act of 1940, as amended (the "Investment Company Act"), it being
understood that certain


                                       9

separate accounts of PLIC are registered as investment companies under the
Investment Company Act in the ordinary course of PLIC's business.

      (w) The Company has established and maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15 and 15d-15 under the Exchange
Act) that (i) are designed to ensure that material information relating to the
Company, including its consolidated subsidiaries, is made known to the Company's
Chief Executive Officer and its Chief Financial Officer by others within those
entities, particularly during the periods in which the filings made by the
Company with the Commission which it may make under Section 13(a), 13(c), 14 or
15(d) of the Exchange Act are being prepared, (ii) have been evaluated for
effectiveness as of the end of the Company's most recent fiscal quarter and
(iii) are effective to perform the functions for which they were established.
comply with the requirements of the Exchange Act.

      (x) Not later than the date of the filing with the Commission of the
Company's most recent Annual Report on Form 10-K or Quarterly Report on Form
10-Q, as the case may be, each of the accountants and the Audit Committee of the
Board of Directors of the Company had been advised of (i) all significant
deficiencies and material weaknesses in the design or operation of internal
controls over financial reporting which are reasonably likely to adversely
affect the Company's ability to record, process, summarize and report financial
information and (ii) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company's
internal controls over financial reporting.

SECTION 2. Purchase of the Preferred Stock by the Underwriters. On the basis of
the representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell 3,000,000 shares of
the Series A Preferred Stock and 10,000,000 shares of the Series B Preferred
Stock to the several Underwriters and each of the Underwriters, severally and
not jointly, agrees to purchase the number of shares of the Series A Preferred
Stock and the Series B Preferred Stock set forth opposite that Underwriter's
name in Schedule I hereto. The respective purchase obligations of the
Underwriters with respect to the Series A Preferred Stock and the Series B
Preferred Stock shall be rounded among the Underwriters to avoid fractional
shares, as the Representative may determine.

      The price of the Series A Preferred Stock shall be $100 per share and the
price of the Series B Preferred Stock shall be $25 per share.

SECTION 3. Offering of Preferred Stock by the Underwriters. Upon authorization
by the Representative of the release of the Preferred Stock, the several
Underwriters propose to offer the Preferred Stock for sale upon the terms and
conditions set forth in each of the related Final Prospectuses and in Annex I.

SECTION 4. Delivery of and Payment for the Preferred Stock. The Preferred Stock
to be purchased by each of the Underwriters hereunder will be represented by one
or more definitive global certificates in book-entry form which will be
deposited by or on behalf


                                       10

of the Company with The Depository Trust Company ("DTC") or its designated
custodian. The Company will deliver the Preferred Stock to Lehman Brothers Inc.,
for the account of each Underwriter, against payment by or on behalf of such
Underwriter of the purchase price therefor by wire transfer in immediately
available funds, by causing DTC to credit the Preferred Stock to the account of
Lehman Brothers Inc. at DTC. Delivery of the Preferred Stock shall be made at
the offices of Sullivan & Cromwell LLP, 125 Broad Street, at 10:00 A.M., New
York City time, on the third full business day following the date of this
Agreement or at such other date or place as shall be determined by agreement
between the Representative and the Company. This date and time are sometimes
referred to as the "Delivery Date." Time shall be of the essence, and delivery
at the time and place specified pursuant to this Agreement is a further
condition of the obligation of each Underwriter hereunder. Upon delivery, the
Preferred Stock shall be registered in such names and in such denominations as
the Representative shall request in writing not less than two full business days
prior to the Delivery Date. For the purpose of expediting the checking and
packaging of the certificates for the Preferred Stock, the Company shall make
the certificates representing the Preferred Stock available for inspection by
the Representative in New York, New York, not later than 2:00 P.M., New York
City time, on the business day prior to the Delivery Date.

SECTION 5. Further Agreements of the Company. The Company covenants and agrees:

      (a) To prepare the Final Prospectuses in a form approved by the
Representative and to file each of the Final Prospectuses pursuant to Rule
424(b) under the Securities Act not later than the Commission's close of
business on the second business day following the execution and delivery of this
Agreement or, if applicable, such earlier time as may be required by Rule
430A(a)(3) under the Securities Act; to make no further amendment or any
supplement to the Registration Statement or to either Final Prospectus except as
permitted herein; to advise the Representative, promptly after it receives
notice thereof, of the time when any amendment to the Registration Statement has
been filed or becomes effective or any supplement to either Final Prospectus or
any amended Final Prospectus has been filed and to furnish the Representative
with copies thereof; to advise the Representative, promptly after it receives
notice thereof, of the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any Interim Prospectus or either Final
Prospectus, of the suspension of the qualification of the Preferred Stock for
offering or sale in any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the Commission for the
amending or supplementing of the Registration Statement or either Final
Prospectus or for additional information; and, in the event of the issuance of
any stop order or of any order preventing or suspending the use of any Basic
Prospectus, Interim Prospectus or either Final Prospectus or suspending any such
qualification, to use promptly its best efforts to obtain its withdrawal;

      (b) To furnish promptly to each of the Representative and to counsel for
the Underwriters a signed copy of the Registration Statement as originally filed
with the


                                       11

Commission, and each amendment thereto filed with the Commission, including all
consents and exhibits filed therewith;

      (c) To deliver promptly to the Representative such number of the following
documents as the Representative shall reasonably request: (i) conformed copies
of the Registration Statement as originally filed with the Commission and each
amendment thereto (in each case excluding exhibits) and (ii) each Interim
Prospectus, each Final Prospectus and any amended or supplemented Final
Prospectus; and, if the delivery of a prospectus is required at any time after
the Effective Time in connection with the offering or sale of the Preferred
Stock or any other securities relating thereto and if at such time any events
shall have occurred as a result of which either Final Prospectus as then amended
or supplemented would include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made when such Final
Prospectus is delivered, not misleading, or, if for any other reason it shall be
necessary to amend or supplement such Final Prospectus in order to comply with
the Securities Act, to notify the Representative and, upon their request, to
file such document and to prepare and furnish without charge to each Underwriter
and to any dealer in securities as many copies as the Representative may from
time to time reasonably request of such amended or supplemented Final Prospectus
which will correct such statement or omission or effect such compliance;

      (d) To file promptly with the Commission any amendment to the Registration
Statement or either Final Prospectus or any supplement to either Final
Prospectus that may, in the judgment of the Company or the Representative, be
required by the Securities Act or requested by the Commission;

      (e) Prior to filing with the Commission any amendment to the Registration
Statement or supplement to either Final Prospectus or any prospectus pursuant to
Rule 424 of the Rules, to furnish a copy thereof to the Representative and
counsel for the Underwriters and obtain the consent of the Representative to the
filing such consent, which consent shall not be unreasonably withheld;

      (f) As soon as practicable after the date of each Final Prospectus, to
make generally available to the Company's security holders and to deliver to the
Representative an earnings statement of the Company and its subsidiaries (which
need not be audited) complying with Section 11(a) of the Securities Act and the
Rules (including, at the option of the Company, Rule 158);

      (g) For a period of five years following the date of each of the Final
Prospectuses, upon request by the Representative, to furnish to the
Representative copies of all materials furnished by the Company to its
shareholders and all public reports and all reports and financial statements
furnished by the Company to the Commission pursuant to the Exchange Act or any
rule or regulation of the Commission thereunder;


                                       12

      (h) Promptly from time to time to take such action as the Representative
may reasonably request to qualify the Preferred Stock for offering and sale
under the securities laws of such jurisdictions as the Representative may
request and to comply with such laws so as to permit the continuance of sales
and dealings therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Preferred Stock; provided that in connection
therewith the Company shall not be required to qualify as a foreign corporation
or to file a general consent to service of process in any jurisdiction;

      (i) For a period of 90 days from the date of each of the Final
Prospectuses, not to, directly or indirectly, (1) offer for sale, sell, pledge
or otherwise dispose of (or enter into any transaction or device which is
designed to, or could be expected to, result in the disposition by any person at
any time in the future of) any shares of preferred stock or securities
convertible into or exchangeable for preferred stock of the Company (other than
the Preferred Stock and shares issued pursuant to employee benefit plans,
qualified stock option plans or other employee compensation plans existing on
the date hereof or pursuant to currently outstanding options, warrants or
rights), or sell or grant options, rights or warrants with respect to any shares
of Preferred Stock or securities convertible into or exchangeable for Preferred
Stock (other than the grant of options pursuant to option plans existing on the
date hereof), (2) enter into any swap or other derivatives transaction that
transfers to another, in whole or in part, any of the economic benefits or risks
of ownership of such shares of Preferred Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Preferred
Stock or other securities, in cash or otherwise, or (3) file or cause to be
filed a registration statement on Form S-8 or other similar form with respect to
any shares of Preferred Stock or securities convertible, exercisable or
exchangeable into Preferred Stock or any other securities of the Company, in
each case without the prior written consent of Lehman Brothers Inc. on behalf of
the Underwriters; and

      (j) To apply the net proceeds from the sale of the Preferred Stock as set
forth in each of the Final Prospectuses.

SECTION 6. Expenses. The Company agrees to pay (a) the costs incident to the
authorization, issuance, sale and delivery of the Preferred Stock and any taxes
payable in that connection; (b) the costs incident to the preparation, printing
and filing under the Securities Act of the Registration Statement and any
amendments and exhibits thereto; (c) the costs of distributing the Registration
Statement as originally filed and each amendment thereto and any post-effective
amendments thereof (including, in each case, exhibits), any Interim Prospectus,
each Final Prospectus and any amendment or supplement to either Final
Prospectus, all as provided in this Agreement; (d) the costs of producing this
Agreement, any supplemental agreement among the Underwriters and any other
related documents in connection with the offering, purchase, sale and delivery
of the Preferred Stock; (e) any applicable listing or other fees; (f) the fees
and expenses of qualifying the Preferred Stock under the securities laws of the
several jurisdictions as provided in Section 5(h) and of preparing, printing and
distributing a Blue Sky Memorandum (including related fees and expenses of
counsel to the Underwriters); (g)


                                       13

the costs and expenses of the Company relating to investor presentations on any
"road show" undertaken in connection with the marketing or the offering of the
Preferred Stock, including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with the
prior approval of the Company, travel and lodging expenses of the Representative
and officers of the Company and any such consultants, and the cost of any
aircraft chartered in connection with the road show; and (h) all other costs and
expenses incident to the performance of the obligations of the Company under
this Agreement; provided that, except as provided in this Section 6 and in
Section 11 the Underwriters shall pay their own costs and expenses, including
the costs and expenses of their counsel, any transfer taxes on the Preferred
Stock which they may sell and the expenses of advertising any offering of the
Preferred Stock made by the Underwriters.

SECTION 7. Conditions of Underwriters' Obligations. The respective obligations
of the Underwriters hereunder are subject to the accuracy, when made and on the
Delivery Date, of the representations and warranties of the Company contained
herein, to the performance by the Company of its obligations hereunder, and to
each of the following additional terms and conditions:

      (a) Each Final Prospectus shall have been timely filed with the Commission
in accordance with Section 5(a); no stop order suspending the effectiveness of
the Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission; and any request of the Commission for inclusion of additional
information in the Registration Statement or either Final Prospectus or
otherwise shall have been complied with.

      (b) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Preferred Stock, the
Registration Statement and each Final Prospectus, and all other legal matters
relating to this Agreement and the transactions contemplated hereby shall be
reasonably satisfactory in all material respects to counsel for the
Underwriters, and the Company shall have furnished to such counsel all documents
and information that they may reasonably request to enable them to pass upon
such matters.

      (c) Debevoise & Plimpton LLP shall have furnished to the Representative
their written opinion, as counsel to the Company, addressed to the Underwriters
and dated the Delivery Date, in form and substance reasonably satisfactory to
the Representative, to the effect that:

            (i) The Company has been duly incorporated and is validly existing
      as a corporation in good standing under the laws of the State of Delaware,
      with corporate power and authority to own its properties and conduct its
      business as described in each Final Prospectus.


                                       14

            (ii) The Company has an authorized capitalization as set forth in
      each of the Final Prospectuses.

            (iii) The shares of the Preferred Stock being delivered on the
      Delivery Date to the Underwriters hereunder have been duly and validly
      authorized and, when issued and delivered against payment therefor will be
      duly and validly issued, fully paid and non-assessable; and the Preferred
      Stock conforms to the descriptions thereof contained in each of the Final
      Prospectuses.

            (iv) Except as described in the Final Prospectuses, the holders of
      outstanding shares of the Company's capital stock are not entitled to
      preemptive or other rights to subscribe for the Preferred Stock.

            (v) The Registration Statement was declared effective under the
      Securities Act as of the date and time specified in such opinion, each of
      the Final Prospectuses was filed with the Commission pursuant to the
      subparagraph of Rule 424(b) of the Rules specified in such opinion on the
      date specified therein and to the knowledge of such counsel, no stop order
      suspending the effectiveness of the Registration Statement has been issued
      and no proceeding for that purpose is pending or threatened by the
      Commission.

            (vi) The Registration Statement and each of the Final Prospectuses
      and any further amendments or supplements thereto made by the Company
      prior to the Delivery Date (except for the financial statements and
      related schedules therein, as to which such counsel need express no
      belief) appear on their face to be appropriately responsive in all
      material respects with the requirements of the Securities Act and the
      Rules.

            (vii) The statements contained in the Basic Prospectus under the
      caption "Description of Capital Stock of Principal Financial Group Inc.",
      in the Series A Final Prospectus under the caption "Description of the
      Shares", in the Series B Final Prospectus under the caption "Description
      of the Shares", and in each Final Prospectus under the caption "Certain
      U.S. Federal Income Tax Consequences", insofar as they describe the terms
      of agreements, the Preferred Stock or Federal statutes, rules and
      regulations, constitute a fair summary thereof.

            (viii) Each of this Agreement and the Remarketing Agreement has been
      duly authorized, executed and delivered by the Company.

            (ix) The issue and sale of the shares of the Preferred Stock being
      delivered on the Delivery Date by the Company pursuant to this Agreement
      and the execution, delivery and performance of this Agreement and the
      Remarketing Agreement by the Company and the consummation of the
      transactions contemplated hereby and thereby will not conflict with or
      result in a breach or violation of (A) any of the provisions of the
      certificate of incorporation or by-laws or similar organizational
      documents of the Company or any of its Significant


                                       15

      Subsidiaries (B) any agreement or instrument listed as an exhibit to the
      Registration Statement, or (C) any New York or Federal statute or the
      Delaware General Corporation Law or any rule or regulation of any New York
      or Federal governmental agency or body having jurisdiction over the
      Company or any of its subsidiaries or any of their properties, in the case
      of clauses (B) and (C), the effect of which, individually or in the
      aggregate, would be to affect the validity of the Preferred Stock, their
      issue or affect adversely the consummation of the transactions
      contemplated hereby or by the Remarketing Agreement, or to have a Material
      Adverse Effect; and no notice, consent, approval, authorization, order,
      registration or qualification of or with or to any court or governmental
      agency or body is required for the issue and sale of the Preferred Stock,
      except for the registration of the Preferred Stock under the Securities
      Act and such consents, approvals, authorizations, registrations or
      qualifications as may be required under the Exchange Act and applicable
      state securities laws in connection with the purchase and distribution of
      the Preferred Stock by the Underwriters and except for the filing of the
      Certificates of Designations with the Delaware Secretary of State.

            (x) Neither the Company nor any of its subsidiaries is an
      "investment company" as defined in the Investment Company Act of 1940, as
      amended, it being understood that certain separate accounts of PLIC are
      registered as investment companies under the Investment Company Act in the
      ordinary course of PLIC's business.

      In rendering such opinion, such counsel may state that their opinion is
limited to matters governed by the Federal laws of the United States of America,
the laws of the State of New York and the Delaware General Corporation Law.

      Such counsel shall also state that in the course of its review and
discussion of the contents of the Registration Statement with certain officers
and employees of the Company and representatives of the Company's independent
accountants, but without independent check or verification, no facts have come
to the attention of such counsel which cause them to believe that the
Registration Statement (except for the financial statements, the related notes
and schedules therein, as to which such counsel need express no belief) as of
the date of each Final Prospectus, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading, or that, as of
the date of each Final Prospectus or as of the date of such opinion, either
Final Prospectus (except for the financial statements, the related notes and
schedules therein, as to which such counsel need express no belief) contained or
contains an untrue statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The foregoing opinion and statement may be qualified by a
statement to the effect that such counsel does not assume any responsibility for
the


                                       16

accuracy, completeness or fairness of the statements contained in the
Registration Statement or either Final Prospectus.

      (d) Karen E. Shaff, General Counsel to the Company, shall have furnished
to the Representative their written opinion, as counsel to the Company,
addressed to the Underwriters and dated the Delivery Date, in form and substance
reasonably satisfactory to the Representative, to the effect that:

            (i) Each of the Company and its Significant Subsidiaries has been
      duly incorporated and is validly existing as a corporation, partnership or
      limited partnership, as applicable, and is in good standing under the laws
      of its jurisdiction, with corporate power and authority to own its
      properties and conduct its business as described in each Final Prospectus;
      the Company is duly qualified to do business as a foreign corporation and
      is in good standing under the laws of each other jurisdiction in which its
      ownership or lease of property or the conduct of its business requires
      such qualification, or is subject to no material liability or disability
      by reason of the failure to be so qualified and in good standing in any
      such jurisdiction; and each subsidiary of the Company is duly qualified to
      do business as a foreign corporation, partnership or limited partnership,
      as applicable, and is in good standing under the laws of each other
      jurisdiction in which its ownership or lease of property or the conduct of
      its business requires such qualification and good standing, except where
      the failure to be so qualified would not have a Material Adverse Effect.

            (ii) The Company has an authorized capitalization as set forth in
      each of the Final Prospectuses. All of the issued shares of capital stock
      of the Company conform to the description thereof contained in each of the
      Final Prospectuses. All of the issued shares of capital stock of each
      Significant Subsidiary of the Company have been duly authorized and
      validly issued and are fully paid and non-assessable and are owned
      directly or indirectly by the Company, free and clear of all liens,
      encumbrances, equities or claims.

            (iii) The shares of the Preferred Stock being delivered on the
      Delivery Date to the Underwriters hereunder have been duly and validly
      authorized and, when issued and delivered against payment therefor will be
      duly and validly issued, fully paid and non-assessable; and the Preferred
      Stock conforms to the descriptions thereof contained in each of the Final
      Prospectuses.

            (iv) Except as described in the Final Prospectuses, the holders of
      outstanding shares of the Company's capital stock are not entitled to
      preemptive or other rights to subscribe for the Preferred Stock.

            (v) To the best of such counsel's knowledge, and other than as set
      forth in each of the Final Prospectuses, there are no legal or
      governmental proceedings pending to which the Company or any of its
      subsidiaries is a party or of which any property or assets of the Company
      or any of its subsidiaries is the


                                       17

      subject which, if determined adversely to the Company or any of its
      subsidiaries, would, individually or in the aggregate, have a Material
      Adverse Effect; and to the best of such counsel's knowledge after due
      inquiry, no such proceedings are threatened or contemplated by
      governmental authorities.

            (vi) The Registration Statement was declared effective under the
      Securities Act as of the date and time specified in such opinion, the
      Final Prospectuses were filed with the Commission pursuant to the
      subparagraph of Rule 424(b) of the Rules specified in such opinion on the
      date specified therein and to the knowledge of such counsel, no stop order
      suspending the effectiveness of the Registration Statement has been issued
      and no proceeding for that purpose is pending or threatened by the
      Commission.

            (vii) To the best of such counsel's knowledge, there are no
      contracts or other documents which are required to be described in either
      Final Prospectus or filed as exhibits to the Registration Statement by the
      Securities Act or by the Rules which have not been described or filed as
      exhibits to the Registration Statement.

            (viii) Each of this Agreement and the Remarketing Agreement has been
      duly authorized, executed and delivered by the Company.

            (ix) The issue and sale of the shares of the Preferred Stock being
      delivered on the Delivery Date by the Company pursuant to this Agreement
      and the execution, delivery and performance of this Agreement and the
      Remarketing Agreement by the Company and the consummation of the
      transactions contemplated hereby and thereby will not conflict with or
      result in a breach or violation of any of the terms or provisions of, or
      constitute a default under, any indenture, mortgage, deed of trust, loan
      agreement or other agreement or instrument to which the Company or its
      subsidiaries is a party or by which the Company or its subsidiaries is
      bound or to which any of the property or assets of the Company or its
      subsidiaries is subject or give the holder of any of the notes,
      debentures, or other evidence of indebtedness of the Company or its
      subsidiaries the right to require repurchase, redemption or repayment of
      all or a portion of such indebtedness by any of the Company or its
      subsidiaries, or result in the creation or imposition of any lien, charge
      or encumbrance upon any of the assets, properties or operations of any of
      the Company or its subsidiaries, nor will such actions result in any
      violation of the provisions of the certificate of incorporation or by-laws
      or similar organizational documents of the Company or its subsidiaries or
      the Demutualization Plan, or any statute or any order, rule or regulation
      of any court or insurance or other regulatory agency or governmental
      agency or body having jurisdiction over the Company or its subsidiaries or
      any of their respective properties or assets, in each case the effect of
      which (other than any violation of the provisions of the certificate of
      incorporation or by-laws or similar organizational documents of the
      Company or any of its subsidiaries), individually


                                       18

      or in the aggregate, would be either to affect the validity of the
      Preferred Stock or their issue or affect adversely the consummation of the
      transactions contemplated hereby or by the Remarketing Agreement, or to
      have a Material Adverse Effect; and no notice, consent, approval,
      authorization, order, registration or qualification of or with or to any
      court or governmental agency or body is required for the issue and sale of
      the Preferred Stock, including without limitation pursuant to the
      Demutualization Plan, except for the registration of the Preferred Stock
      under the Securities Act and such consents, approvals, authorizations,
      registrations or qualifications as may be required under the Exchange Act
      and applicable state securities laws in connection with the purchase and
      distribution of the Preferred Stock by the Underwriters and except for the
      filing of the Certificate of Designations with the Delaware Secretary of
      State.

            (x) Each of the Company and its Insurance Entities is duly organized
      and licensed or registered as an insurance or insurance holding company,
      as the case may be, in its jurisdiction of incorporation, and, in the case
      of an insurance company, is duly licensed or authorized in each other
      jurisdiction where it is required to be so licensed or authorized to
      conduct its business and all such licenses or authorizations are in full
      force and effect. Except as otherwise described in each of the Final
      Prospectuses, each of the Insurance Entities has all Approvals of and from
      all insurance and regulatory authorities, as the case may be, to conduct
      its business, with such exceptions as would not have, individually or in
      the aggregate, a Material Adverse Effect, and all such Approvals are in
      full force and effect except where the failure of such Approvals to be in
      full force and effect would not have, individually or in the aggregate, a
      Material Adverse Effect. There is no pending or, to the knowledge of such
      counsel after due inquiry, threatened action, suit, proceeding or
      investigation that could reasonably be expected to lead to the revocation,
      termination, suspension or limitation of any such Approval or otherwise
      impose any limitation on the conduct of business of any Insurance Entity,
      the revocation, termination or suspension of which would have,
      individually or in the aggregate, a Material Adverse Effect, and, to the
      knowledge of such counsel after due inquiry, no insurance or regulatory
      agency or body has issued any order or decree impairing, restricting or
      prohibiting the payment of dividends by any Insurance Entity. Except as
      otherwise described in each of the Final Prospectuses, none of the
      Insurance Entities has received any notification from any applicable
      regulatory authority to the effect that any additional Approvals from such
      regulatory authority are needed to be obtained by such Insurance Entity in
      any case where it could be reasonably expected that (i) any of the
      Insurance Entities would in fact be required either to obtain any such
      additional Approvals or cease or otherwise limit engaging in certain
      business and (ii) the failure to have such Approvals or limiting such
      business would have, individually or in the aggregate, a Material Adverse
      Effect. Each of the Company and its Insurance Entities is in compliance
      with all applicable insurance laws, rules, regulations, orders, bylaws and
      similar requirements which are applicable to it, and has filed all
      notices, reports, documents or other information required to be


                                       19

      filed thereunder, in each case with such exceptions as would not have,
      individually or in the aggregate, a Material Adverse Effect.

            (xi) Each of the Company and its Bank Subsidiaries, Broker-Dealer
      Subsidiaries and Investment Advisor Subsidiaries is duly licensed or
      registered as a bank, broker-dealer or investment advisor, as the case may
      be, in each jurisdiction where it is required to be so licensed or
      registered to conduct its business. Each Bank Subsidiary, Broker-Dealer
      Subsidiary and Investment Advisor Subsidiary has all other necessary
      Approvals of and from all applicable regulatory authorities, including any
      self-regulatory organization, to conduct its businesses, in each case with
      such exceptions as would not have, individually or in the aggregate, a
      Material Adverse Effect. There is no pending or, to the knowledge of such
      counsel after due inquiry, threatened action, suit, proceeding or
      investigation that could reasonably be expected to lead to the revocation,
      termination, suspension or limitation of any such Approval or otherwise
      impose any limitation on the conduct of business of any Bank Subsidiary,
      Broker-Dealer Subsidiary or Investment Advisor Subsidiary, the revocation,
      termination or suspension of which would have, individually or in the
      aggregate, a Material Adverse Effect. Except as otherwise described in
      each of the Final Prospectuses, none of the Bank Subsidiaries,
      Broker-Dealer Subsidiaries or Investment Advisor Subsidiaries has received
      any notification from any applicable regulatory authority to the effect
      that any additional Approvals from such regulatory authority are needed to
      be obtained by such Bank Subsidiary, Broker-Dealer Subsidiary or
      Investment Advisor Subsidiary in any case where it could be reasonably
      expected that (i) any of the Bank Subsidiaries, Broker-Dealer Subsidiaries
      or Investment Advisor Subsidiaries would in fact be required either to
      obtain any such additional Approvals or cease or otherwise limit engaging
      in certain business and (ii) the failure to have such Approvals or
      limiting such business would have, individually or in the aggregate, a
      Material Adverse Effect; and each Bank Subsidiary, Broker-Dealer
      Subsidiary and Investment Advisor Subsidiary is in compliance with the
      requirements of the banking, broker-dealer and investment advisor laws and
      regulations of each jurisdiction which are applicable to such subsidiary,
      and has filed all notices, reports, documents or other information
      required to be filed thereunder, in each case with such exceptions as
      would not have, individually or in the aggregate, a Material Adverse
      Effect.

            (xii) Except as described in the Final Prospectuses, to the best of
      such counsel's knowledge, there are no contracts, agreements or
      understandings between the Company and any person granting such person the
      right to require the Company to file a registration statement under the
      Securities Act with respect to any securities of the Company owned or to
      be owned by such person or to require the Company to include such
      securities in the securities registered


                                       20

      pursuant to the Registration Statement or in any securities being
      registered pursuant to any other registration statement filed by the
      Company under the Securities Act.

      In rendering such opinion, such counsel may state that her opinion is
limited to matters governed by the Federal laws of the United States of America,
the laws of the State of Iowa and the Delaware General Corporation Law.

      Such counsel shall also state that in the course of review and discussion
of the contents of the Registration Statement by her or by lawyers in the
Company's law department under her supervision, but without independent check or
verification, no facts have come to her attention which lead her to believe that
the Registration Statement (except for the financial statements, the related
notes and schedules therein, as to which such counsel need express no belief) as
of the date of each Final Prospectus, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein not misleading, or that, as
of the date of the Final Prospectuses or as of the date of such opinion, either
Final Prospectus (except for the financial statements, the related notes and
schedules therein, as to which such counsel need express no belief) contained or
contains any untrue statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The foregoing opinion and statement may be qualified by a
statement to the effect that she does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or either Final Prospectus.

      (e) The Representative shall have received from Sullivan & Cromwell LLP,
counsel for the Underwriters, such opinion or opinions, dated the Delivery Date,
with respect to the issuance and sale of the Preferred Stock, the Registration
Statement, each Final Prospectus and other related matters as the Representative
may reasonably require, and the Company shall have furnished to such counsel
such documents as they reasonably request for the purpose of enabling them to
pass upon such matters.

      (f) At the time of execution of this Agreement, the Representative shall
have received from Ernst & Young LLP a letter or letters, in form and substance
satisfactory to the Representative, addressed to the Underwriters and dated the
date hereof (i) confirming that they are independent public accountants within
the meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission and (ii) stating, as of the date hereof (or,
with respect to matters involving changes or developments since the respective
dates as of which specified financial information is given in the Final
Prospectuses, as of a date not more than five days prior to the date hereof),
the conclusions and findings of such firm with respect to the financial
information and other matters ordinarily covered by accountants' "comfort
letters" to underwriters in connection with registered public offerings.


                                       21

      (g) With respect to the letter or letters of Ernst & Young LLP referred to
in the preceding paragraph and delivered to the Representative concurrently with
the execution of this Agreement (the "initial letters"), the Company shall have
furnished to the Representative a letter (the "bring-down letter") of such
accountants, addressed to the Underwriters and dated the Delivery Date (i)
confirming that they are independent public accountants within the meaning of
the Securities Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of Regulation S-X
of the Commission, (ii) stating, as of the date of the bring-down letter (or,
with respect to matters involving changes or developments since the respective
dates as of which specified financial information is given in the Final
Prospectuses, as of a date not more than five days prior to the date of the
bring-down letter), the conclusions and findings of such firm with respect to
the financial information and other matters covered by the initial letters and
(iii) confirming in all material respects the conclusions and findings set forth
in the initial letters.

      (h) The Company shall have furnished to the Representative a certificate,
dated the Delivery Date, of its Chairman of the Board, its President or a Vice
President and its chief financial officer stating that:

            (i) The representations, warranties and agreements of the Company in
      Section 1 are true and correct as of the Delivery Date; the Company has
      complied with all its agreements contained herein; and the conditions set
      forth in paragraphs (a) and (i) of this Section 7 have been fulfilled; and

            (ii) They have carefully examined the Registration Statement and the
      Final Prospectuses and, in their opinion (A) as of the date of each of the
      Final Prospectuses, the Registration Statement and the Final Prospectuses
      did not include any untrue statement of a material fact and did not omit
      to state a material fact required to be stated therein or necessary to
      make the statements therein not misleading, and (B) since the date of each
      of the Final Prospectuses, no event has occurred which should have been
      set forth in a supplement or amendment to the Registration Statement or
      the Final Prospectuses which has not been so set forth.

      (i) (A) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included in
the Final Prospectuses any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Final Prospectuses, or (B) since such
date, there has not been any decrease in the outstanding capital stock of the
Company in excess of 10 million shares or increase in the consolidated long-term
debt of the Company in excess of $10,000,000, or any development involving a
prospective change, in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the Final
Prospectuses, the effect of which, in any such case described in clause (A) or
(B), is, in


                                       22

the judgment of the Representative, so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Preferred Stock being delivered on the Delivery Date on the terms and in
the manner contemplated in the Final Prospectuses.

      (j) Subsequent to the execution and delivery of this Agreement there shall
not have occurred any of the following: (i) trading of any securities of or
guaranteed by the Company shall have been suspended on any exchange or in any
over-the-counter market, (ii) trading in securities on the New York Stock
Exchange, the American Stock Exchange, and the National Association of
Securities Dealers, Inc., shall have been generally suspended, or there shall
have been a material disruption in settlement of securities generally, (iii)
minimum or maximum ranges for prices shall have been generally established on
the New York Stock Exchange by the Commission or by the New York Stock Exchange,
(iv) a general banking moratorium shall have been declared by federal or New
York State authorities, (v) any major disruption of settlements of securities or
clearance services in the United States, or (vi) any outbreak or escalation of
major hostilities in which the United States is involved, any declaration of war
by the United States Congress or any other substantial national or international
calamity, crisis or emergency (including, without limitation, acts of terrorism)
affecting the United States, in any such case provided for in clauses (i)
through (vi), as to make it, in the judgment of the Representative,
impracticable or inadvisable to proceed with the public offering or delivery of
the Preferred Stock being delivered on the Delivery Date on the terms and in the
manner contemplated in the Final Prospectuses.

      (k) On or after the date of this Agreement, (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities or the debt
securities of any of its Significant Subsidiaries (including any "surplus notes"
of PLIC) or PLIC's claims paying ability or financial strength by any
"nationally recognized statistical rating organization", as such term is defined
in Rule 436(g)(2) of the Rules, (ii) no such organization shall have publicly
announced that it has under surveillance or review, with possible negative
implications, its rating of any of the Company's debt securities or the debt
securities of any of its Significant Subsidiaries (including any "surplus notes"
of PLIC) or PLIC's claims paying ability or financial strength and (iii) the
Preferred Stock shall continue to be rated BBB by Standard & Poor's and Baa2 by
Moody's.

      (l) No Underwriter shall have discovered and disclosed to the Company on
or prior to the Delivery Date that the Registration Statement or the Final
Prospectuses or any amendment or supplement thereto contains an untrue statement
of a fact which, in the reasonable opinion of Sullivan & Cromwell LLP, counsel
for the Underwriters, is material or omits to state a fact which, in the
reasonable opinion of such counsel, is material and is required to be stated
therein or is necessary to make the statements therein not misleading.


                                       23

      All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.

SECTION 8.    Indemnification and Contribution.

      (a) The Company shall indemnify and hold harmless each Underwriter, its
directors, officers and employees and each person, if any, who controls any
Underwriter within the meaning of the Securities Act, from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or action
relating to purchases and sales of Preferred Stock), to which that Underwriter,
director, officer, employee or controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, any
Interim Prospectus or either Final Prospectus or in any amendment or supplement
thereto or the omission or alleged omission to state in the Registration
Statement, any Interim Prospectus or either Final Prospectus, or in any
amendment or supplement thereto, any material fact required to be stated therein
or necessary to make the statements therein not misleading, and shall reimburse
each Underwriter and each such director, officer, employee or controlling person
promptly upon demand for any legal or other expenses reasonably incurred by that
Underwriter, director, officer, employee or controlling person in connection
with investigating or defending or preparing to defend against any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
however, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or action arises out of, or is
based upon, any untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement, any Interim Prospectus or
either Final Prospectus, or in any such amendment or supplement, in reliance
upon and in conformity with written information concerning such Underwriter
furnished to the Company through the Representative by or on behalf of any
Underwriter specifically for inclusion therein which information consists solely
of the information specified in Section 8(e). The foregoing indemnity agreement
is in addition to any liability which the Company may otherwise have to any
Underwriter or to any director, officer, employee or controlling person of that
Underwriter.

      (b) Each Underwriter, severally and not jointly, shall indemnify and hold
harmless the Company, its officers and employees, each of its directors, and
each person, if any, who controls the Company within the meaning of the
Securities Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof, to which the Company or any such
director, officer or controlling person may become subject, under the Securities
Act or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, any
Interim Prospectus or either Final Prospectus or in any amendment or supplement
thereto, or (ii) the omission or alleged omission to state in the Registration
Statement, any Interim


                                       24

Prospectus or either Final Prospectus, or in any amendment or supplement
thereto, any material fact required to be stated therein or necessary to make
the statements therein not misleading, but in each case only to the extent that
the untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information concerning
such Underwriter furnished to the Company through the Representative by or on
behalf of that Underwriter specifically for inclusion therein, which information
is limited to the information set forth in Section 8(e), and shall reimburse the
Company and any such director, officer or controlling person for any legal or
other expenses reasonably incurred by the Company or any such director, officer
or controlling person in connection with investigating or defending or preparing
to defend against any such loss, claim, damage, liability or action as such
expenses are incurred. The foregoing indemnity agreement is in addition to any
liability which any Underwriter may otherwise have to the Company or any such
director, officer, employee or controlling person.

      (c) Promptly after receipt by an indemnified party under this Section 8 of
notice of any claim or the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under this Section 8, notify the indemnifying party in writing of the
claim or the commencement of that action; provided, however, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have under this Section 8(a) or (b) except to the extent it has been
materially prejudiced by such failure and, provided further, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have to an indemnified party otherwise than under this Section 8(a) or (b).
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party). After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 8 for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof other than reasonable costs of investigation. No
indemnifying party shall without the prior written consent of the indemnified
parties (which consent shall not be unreasonably withheld), settle or compromise
or consent to the entry of any judgment with respect to any pending or
threatened claim, action, suit or proceeding in respect of which indemnification
or contribution may be sought hereunder (whether or not the indemnified parties
are actual or potential parties to such claim or action) unless such settlement,
compromise or consent (i) includes an unconditional release of each indemnified
party from all liability arising out of such claim, action, suit or proceeding,
and (ii) does not include a statement as to, or an admission of, fault,
culpability or a failure to act, by or on behalf of any indemnified party.


                                       25

      (d) If the indemnification provided for in this Section 8 shall for any
reason be unavailable to or insufficient to hold harmless an indemnified party
under Section 8(a) or 8(b) in respect of any loss, claim, damage or liability,
or any action in respect thereof, referred to therein, then each indemnifying
party shall, in lieu of indemnifying such indemnified party, contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability, or action in respect thereof, (i) in such proportion
as shall be appropriate to reflect the relative benefits received by the Company
on the one hand and the Underwriters on the other from the offering of the
Preferred Stock or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Underwriters on the other with
respect to the statements or omissions which resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other with respect to such offering shall
be deemed to be in the same proportion as the total net proceeds from the
offering of the Preferred Stock purchased under this Agreement (before deducting
expenses) received by the Company, on the one hand, and the total underwriting
discounts and commissions received by the Underwriters with respect to the
shares of the Preferred Stock purchased under this Agreement, on the other hand,
bear to the total gross proceeds from the offering of the shares of the
Preferred Stock under this Agreement, in each case as set forth in the table on
the cover pages of the Final Prospectuses. The relative fault shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or the Underwriters, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Underwriters
agree that it would not be just and equitable if contributions pursuant to this
Section were to be determined by pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified party as a
result of the loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section shall be deemed to include, for purposes of
this Section 8(d), any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 8(d), no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the shares of Preferred Stock underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise paid or become liable to pay by
reason of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute as provided in this Section 8(d) are
several in proportion to their respective underwriting obligations and not
joint.


                                       26

      (e) The Underwriters severally confirm and the Company acknowledges that
the statements with respect to the public offering of the Preferred Stock by the
Underwriters set forth on the cover page of and the concession and reallowance
figures appearing under the caption "Underwriting" in, the Prospectus are
correct and constitute the only information concerning such Underwriters
furnished in writing to the Company by or on behalf of the Underwriters
specifically for inclusion in the Registration Statement and the Final
Prospectuses.

SECTION 9.    Defaulting Underwriters.

      If, on the Delivery Date, any Underwriter defaults in the performance of
its obligations under this Agreement, the remaining non-defaulting Underwriters
shall be obligated to purchase the Preferred Stock which the defaulting
Underwriter agreed but failed to purchase on the Delivery Date in the respective
proportions which the number of shares of the Preferred Stock set opposite the
name of each remaining non-defaulting Underwriter in Schedule I hereto bears to
the total number of shares of the Preferred Stock set opposite the names of all
the remaining non-defaulting Underwriters in Schedule I hereto; provided,
however, that the remaining non-defaulting Underwriters shall not be obligated
to purchase any of the Preferred Stock on the Delivery Date if the total number
of shares of the Preferred Stock which the defaulting Underwriter or
Underwriters agreed but failed to purchase on such date exceeds 9.09% of the
total number of shares of the Preferred Stock to be purchased on the Delivery
Date, and any remaining non-defaulting Underwriter shall not be obligated to
purchase more than 110% of the number of shares of the Preferred Stock which it
agreed to purchase on the Delivery Date pursuant to the terms of Section 2. If
the foregoing maximums are exceeded, the remaining non-defaulting Underwriters,
or those other underwriters satisfactory to the Representative who so agree,
shall have the right, but shall not be obligated, to purchase, in such
proportion as may be agreed upon among them, all the Preferred Stock to be
purchased on the Delivery Date. If the remaining Underwriters or other
underwriters satisfactory to the Representative do not elect to purchase the
shares which the defaulting Underwriter or Underwriters agreed but failed to
purchase on the Delivery Date, this Agreement shall terminate without liability
on the part of any non-defaulting Underwriter or the Company, except that the
Company will continue to be liable for the payment of expenses to the extent set
forth in Sections 6 and 11. As used in this Agreement, the term "Underwriter"
includes, for all purposes of this Agreement unless the context requires
otherwise, any party not listed in Schedule I hereto who, pursuant to this
Section 9, purchases Preferred Stock which a defaulting Underwriter agreed but
failed to purchase.

      Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company for damages caused by its default. If other
Underwriters are obligated or agree to purchase the Preferred Stock of a
defaulting or withdrawing Underwriter, either the Representative or the Company
may postpone the Delivery Date for up to seven full business days in order to
effect any changes that in the opinion of


                                       27

counsel for the Company or counsel for the Underwriters may be necessary in the
Registration Statement, the Final Prospectuses or in any other document or
arrangement.

SECTION 10. Termination. The obligations of the Underwriters hereunder may be
terminated by the Representative by notice given to and received by the Company
prior to delivery of and payment for the Preferred Stock if, prior to that time,
any of the events described in Sections 7(i), 7(j) or 7(k), shall have occurred
or if the Underwriters shall decline to purchase the Preferred Stock for any
reason permitted under this Agreement.

SECTION 11. Reimbursement of Underwriters' Expenses. If the Company shall fail
to tender the Preferred Stock for delivery to the Underwriters by reason of any
failure, refusal or inability on the part of the Company to perform any
agreement on its part to be performed, or because any other condition of the
Underwriters' obligations hereunder required to be fulfilled by the Company is
not fulfilled, the Company will reimburse the Underwriters for all reasonable
out-of-pocket expenses (including fees and disbursements of counsel) incurred by
the Underwriters in connection with this Agreement and the proposed purchase of
the Preferred Stock, and upon demand the Company shall pay the full amount
thereof to the Representative. If this Agreement is terminated pursuant to
SECTION 9 by reason of the default of one or more Underwriters, the Company
shall not be obligated to reimburse any defaulting Underwriter on account of
those expenses.

SECTION 12.   Notices, Etc.  All statements, requests, notices and agreements
hereunder shall be in writing, and:

      (a) if to the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission to Lehman Brothers Inc., 745 Seventh Avenue, New York,
N.Y. 10019, Attention: Syndicate Registration Department, Fax (212) 526-0943,
with a copy, in the case of any notice pursuant to Section 8(c), to the Director
of Litigation, Office of the General Counsel, Lehman Brothers Inc., 399 Park
Avenue, 15th Floor, New York, NY 10022;

      (b) if to the Company, shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: General Counsel (Fax: 515-235-9852);
provided, however, that any notice to an Underwriter pursuant to Section 8(c)
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representative, which address will be supplied to any other party hereto by the
Representative upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Underwriters by Lehman Brothers Inc. on behalf of the
Representative.

SECTION 13. Persons Entitled to Benefit of Agreement. This Agreement shall inure
to the benefit of and be binding upon the Underwriters, the Company, and their
respective successors. This Agreement and the terms and provisions hereof are
for the sole benefit of only those persons, except that (A) the representations,
warranties, indemnities and


                                       28

agreements of the Company contained in this Agreement shall also be deemed to be
for the benefit of the directors, officers and the person or persons, if any,
who control any Underwriter within the meaning of Section 15 of the Securities
Act and (B) the indemnity agreement of the Underwriters contained in Section
8(b) of this Agreement shall be deemed to be for the benefit of directors of the
Company, officers of the Company who have signed the Registration Statement and
any person controlling the Company within the meaning of Section 15 of the
Securities Act. Nothing in this Agreement is intended or shall be construed to
give any person, other than the persons referred to in this Section 13, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein.

SECTION 14. Survival. The respective indemnities, representations, warranties
and agreements of the Company and the Underwriters contained in this Agreement
or made by or on behalf on them, respectively, pursuant to this Agreement, shall
survive the delivery of and payment for the Preferred Stock and shall remain in
full force and effect, regardless of any investigation made by or on behalf of
any of them or any person controlling any of them.

SECTION 15. Definition of the Terms "Business Day" and "Subsidiary". For
purposes of this Agreement, (a) "business day" means each Monday, Tuesday,
Wednesday, Thursday or Friday which is not a day on which banking institutions
in New York are generally authorized or obligated by law or executive order to
close and (b) "subsidiary" has the meaning set forth in Rule 405 of the Rules.

SECTION 16. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of New York.

SECTION 17. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.

SECTION 18. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.


                                       29

      If the foregoing correctly sets forth the agreement between the Company
and the Underwriters, please indicate your acceptance in the space provided for
that purpose below.

                                        Very truly yours,

                                        PRINCIPAL FINANCIAL GROUP, INC.


                                        By  /s/ Joyce N. Hoffman
                                            ------------------------------------
                                            Name:   Joyce N. Hoffman
                                            Title:  Senior Vice President
                                                    and Corporate Secretary


                                        By /s/ Craig Bassett
                                            ------------------------------------
                                            Name:   Craig Bassett
                                            Title:  Vice President and Treasurer




Accepted:

LEHMAN BROTHERS INC.
For themselves and as Representative
of the several Underwriters named
in Schedule I hereto

By LEHMAN BROTHERS INC.


By /s/ Russell Hackmann
   ----------------------
Authorized Representative

                                                                         ANNEX I


      (1) Each Underwriter represents and agrees that: (i) it has not offered or
sold and, prior to the expiry of a period six months from the date of issuance
of the Preferred Stock, will not offer or sell any Preferred Stock to any
persons in the United Kingdom, except to persons whose ordinary activities
involved them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purpose of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995 (as amended); (ii) it has only communicated or
caused to be communicated, and will only communicate or cause to be
communicated, any invitation or inducement to engage in investment activity
(within the meaning of Section 21 of the Financial Services and Markets Act 2000
("FSMA")) received by it in connection with the issue or sale of any Preferred
Stock in circumstances in which Section 21(1) of the FSMA does not apply to the
Company; and (iii) it has complied, and will comply with, all applicable
provisions of the FSMA with respect to anything done by it in relation to the
Preferred Stock in, from or otherwise involving the United Kingdom.


                                       31

                                   SCHEDULE I





Underwriter                                Number of shares of       Number of shares of
                                           Series A Preferred Stock  Series B Preferred
                                           to be purchased           Stock to be purchased

                                                               
Lehman Brothers Inc.                       1,770,000                 5,900,000
UBS Securities LLC                           600,000                 2,000,000
Goldman, Sachs & Co.                         300,000                 1,000,000
Banc of America Securities LLC               150,000                   500,000
JP Morgan                                     75,000                   250,000
Wachovia Capital Markets, LLC                 75,000                   250,000
Guzman & Company                              30,000                   100,000



                                       32