Principal Residential Mortgage Quickly Moves Up the Ranks as a Nationwide Residential Lender

Business Wire, April 1, 2002

Business Editors

DES MOINES, Iowa--(BUSINESS WIRE)--April 1, 2002

Principal Residential Mortgage, Inc., the residential mortgage company of the Principal Financial Group(R), announces its significant move to the 12th largest residential mortgage originator in the nation on the prestigious Inside Mortgage Finance ranking, up from 26th at year-end 2000. The nationwide lender also moved up two spaces to 13th in the publication's ranking of largest loan servicers. Unlike the growth some other leading residential mortgage lenders experienced, the expansion leading to this rise is the result of organic growth.

"2001 was a tremendous year for Principal Residential Mortgage in a number of respects," said Paul Bognanno, president and CEO of Principal Residential Mortgage. "Not only did we deliver record earnings and record loan production, we also saw a nearly $25 billion increase in our loan servicing portfolio, and introduced many new technologies and products to our customers."

Principal Residential Mortgage key highlights for 2001 included:

-- Operating earnings for the mortgage banking segment of the Principal
Financial Group increased 153 percent to $126.7 million from $50 million in
2000.

-- Origination volume increased by 355 percent to $37.8 billion from $8.3
billion in 2000.

-- The servicing portfolio increased by 44 percent to $80.5 billion from 56.0
billion in 2000.

-- The company expanded into new geographic areas through the opening of
several additional wholesale and retail sales offices across the nation, and
the opening of a new Mortgage Direct loan center in the Kansas City area.

-- An award winning, state-of-the-art Correspondent Lending Center web site was
unveiled, making it easier, faster and more efficient for correspondents to do
business. (www.principal.com/correspond ent)

-- The Home Loan Service Center website for customers was enhanced by allowing
customers to apply through an online process, the ability to receive
personalized mortgage offers, subscription services (such as payment tracking),
and other innovative features.

-- Andueza y Principal, the company's Chilean mortgage affiliate, doubled its
market share on the way to achieving a 24% ROE.


                Principal Residential Mortgage Results

                                   2000               2001

Correspondent Lending funding      $6.4 billion       $28.5 billion
Wholesale Lending funding          $1.1 billion       $6.2 billion
Retail originations                $734 million       $2.4 billion
Mortgage direct originations       $119 million       $692 million
Purchase loans (acquisitions)      $3.8 billion       $4.2 billion
Number of customer relationships   581,700            741,100
Servicing portfolio                $56.0 billion      $80.5 billion

"Principal Residential Mortgage has a very proud history," said Bognanno. " We have truly `been there, done that' when it comes to the mortgage business - there's not an economic cycle or an issue that we haven't seen, haven't dealt with and haven't successfully navigated. But despite our history, it's our future we're excited about. We are going to take things to a whole new level in 2002."

"Our strong performance in 2001 gives us a solid foundation to continue growth in 2002," said Bognanno. "We've developed a relentless dedication to innovation, and to delivering a very high level of personal service to our customers and business partners, and will continue to do so in the future."

Principal Residential Mortgage, Inc., is a premier full-service lending institution. The Principal Financial Group has over 65 years of residential lending experience. The company services more than $80 billion in loans for three quarter of a million home owners across the nation.

About the Principal Financial Group

The Principal Financial Group(R) (The Principal (R))(1) is a leader in offering businesses, individuals and institutional clients a wide range of financial products and services, including retirement and investment services, life and health insurance and mortgage banking through its diverse family of financial services companies. More employers choose the Principal Financial Group for their 401(k) plans than any other bank, mutual fund, or insurance company in the United States(2). A member of the Fortune 500, the Principal Financial Group has $120.2 billion in assets under management(3) and serves some 13 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For more information, visit www.principal.com.

Forward looking and cautionary statements

This release contains certain statements which are not historical facts and which constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements as to sales targets, sales and earnings trends, and management's beliefs, expectations, goals and opinions. These statements are based on a number of assumptions concerning future conditions that may ultimately prove to be inaccurate. Future events and their effects on the company may not be those anticipated, and actual results may differ materially from the results anticipated in these forward-looking statements. The risks, uncertainties and factors that could cause or contribute to such material differences are discussed in the company's registration statement on Form S-1 filed by the company with the Securities and Exchange Commission. These risks and uncertainties include, without limitation: competitive factors; volatility of financial markets; decrease in ratings; interest rate changes; inability to attract and retain sales representatives; international business risks; foreign currency exchange rate fluctuations; and investment portfolio risks.