Good morning and welcome to the Principal Financial Group First Quarter 2008 Conference Call. There will be a question-and-answer period after the speakers have completed their remarks. (Operator Instructions). I would now like to turn the conference over to Tom Graf, Senior Vice President of Investor Relations.

Thank you. Good morning and welcome to the Principal Financial Group’s quarterly conference call. If you don’t already have a copy, the earnings release, financial supplement and additional information on the company’s investment portfolio, can be found on our website at www.principal.com/investor. Following our reading of the Safe Harbor Provision, Chairman, Barry Griswell; Chief Operating Officer, Larry Zimpleman; and Chief Financial Officer, Mike Gersie will deliver some prepared remarks. Then we’ll open up for questions. Others available for the Q&A are: Division Presidents, John Aschenbrenner, responsible for the Life and Health Insurance segment, and Jim McCaughan, responsible for Global Asset Management; and Julia Lawler, Chief Investment Officer. Some of the comments made during this conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act. The company does not revise or update them to reflect new information, subsequent events, or changes in strategy. Risks and uncertainties that could cause actual results to differ materially from those expressed or implied are discussed in the company’s most recent annual report on Form 10-K filed by the company with the Securities and Exchange Commission. Barry?

Thanks, Tom, and welcome to everyone on the call. As you know effective May 1, Larry Zimpleman assumed the role of CEO. As such this will be my last earnings call. I will focus my opening comments not on the quarter but rather on the leadership team taking this company forward. Larry and Mike Gersie will follow my remarks with an overview of the quarter and some color on execution of our growth strategy. Since our IPO in 2001, we have communicated our performance and progress in three key areas: continuing growth in our US and international accumulation businesses, leveraging our Global Asset Management expertise and profitably growing our Life and Health insurance businesses. The team taking us forward is the same team that has led the day-to-day operations of this organization and delivered strong performance since we went public. I will start with some accomplishments of three individuals whose leadership has been instrumental in driving strong growth in our US and international accumulation businesses; Larry Zimpleman, Dan Houston, who recently was named President of our US Asset Accumulation segment and Norman Sorensen, CEO of Principal International who we recently promoted to Executive Vice President. Larry and Dan along with our outstanding retirement sales team have submitted the Principal’s leadership in the US retirement industry driving full service accumulation account values to nearly $100 billion and capturing the number one position by plans in bundle 401(k), defined benefit non-qualified and ESOP. Larry and Norman have taken Principal International from a loss in 2001 to more than a $100 million of earnings in 2007 with more than $30 billion in assets under management as of quarter end and top five positions in most of its markets. Moving to Global Asset Management, under Jim McCaughan’s leadership, we have seen third party assets…

Thanks Barry for your words of support and for your vision, dedication and hard work over the course of 20 years with the Principal. Because of your leadership, we are positioned to capitalize on the opportunities and face the challenges that are ahead. Before I begin my overview, a brief comment on first quarter’s difficult operating environment. Capital market declines were severe including a 9.9% drop in the S&P 500 index. And the CMBS market experienced unprecedented stress as a result of the general credit crisis. So, while the results for the quarter were below our long term annual earnings per share growth target of 11 to 13%, we have used 6% earnings per share growth as a very solid result and one that demonstrates the benefit of having a diverse stream of earnings. Importantly, we were very pleased with the number of key growth indicators, measures we believe demonstrate our competitive strengths and our ability to deliver on earnings per share and ROE goals over the long term. Starting with the US asset accumulation segment, full service accumulation delivered record sales of $3.5 billion, an increase of 57% compared to the year ago quarter. Two key factors are driving our continued sales success. The advantage we have in the marketplace with Total Retirement Suite and our increasing momentum with distribution alliances. In the first quarter, Total Retirement Suite made up 67% of sales based on assets. Alliance sales were up nearly 150% from a year ago to $2.2 billion. With gross pipeline of 18% from year ago, we remain highly optimistic about our outlook for full year sales. Strong sales coupled with strong retention drove full service accumulation net cash flows to a record $3 billion, an improvement of 126%. Deposits were up 37% from a year ago. By…

Thanks Larry. This morning I’ll spend a few minutes providing financial detail for each of our four operating segments including items impacting comparability between periods. I will start with US asset accumulation, segment account values are up $6.8 billion or 4% from a year ago to $175 billion at quarter end. Well, segment earnings decreased $16 million or 10%, also this accumulation mutual funds and individual annuities made up the vast majority of the change in account values and earnings for the segment. That’s where I’ll focus my remarks starting with a high level comment and the impact of recent market performance. Debt markets performed in first quarter 2008 consistent with our 2% per quarter assumption, full service accumulation would have ended the quarter with an additional $8 plus billion of account values, in the mutual fund business with an initial $3 plus billion. The sharp drop in markets has significantly impacted revenues and this revenue decline occurred at a time when we were increasing our strategic investments. In Retire Secure, asset retention and retirement income management in full service accumulation business and an expanding investment offerings and ramping up distribution in the funds business. During the first quarter, we initiated a corporate wide expense reduction effort to offset a significant portion of the impact of revenue decline. These efforts helped but did not totally eliminate pressure on new term earnings. Well, we absolutely committed to aligning expenses with revenues over the long term. We believe doing so, demands are measured thoughtful approach. Should weak markets persist over, we will respond accordingly. That said we continue to make ongoing investments, we believe are needed drive strong sales growth and outstanding customer retention over the long term. Moving to my detailed review, at $68 million in the first quarter full service…

(Operator instructions). Your first question is from Tom Kilmokie with Goldman Sachs.

Hi, good morning. Just a couple of quick questions, I guess number one you talked about capital little bit and I just wanted to kind of understand a little bit how that impacted your decision apparently not to buyback any stock during the first quarter when it averaged $58 and in ’07, you were relatively aggressive buying it back at closer to $66 bucks a share and even -- so I am just a little bit, I want to get some little bit more clarity on your buyback and then I could follow up with another question?

Well, good morning Tom. This is Barry, we will let Mike maybe chime in. but I think I would answer that it’s primarily amount of capital we had and we don’t normally try to buy shares back opportunistically based on share price, we typically have an authorization and we often use a 10b5 and go out into the market. So, it really was related more to our capital adequacy and the volatility in the markets to make sure that we are being prudent and more so than the stock price. Mike you want to add.

I think that is right, Barry. I think the other thing you have to remember is this organization generates a lot of free cash so as we look out over the remainder of the year I think as we said in the past roughly half of our operating earnings, organic growth the rest can be used for either dividends or share repurchase or acquisitions. So, I think we have got adequate capital resources but as Barry said I think we like other companies are keeping a little bit of dry powder given all the volatility in the markets.

Okay. So, we should expect in the balance of the year that you would pick up a little bit on the share buyback?

I think it will be premature or for me to indicate but that certainly a possibility.

Okay. And that if I can just follow up sorry I apologize if this is well known to people. But, just that you can just review the group life, why you end up having the loss in the fourth quarter and the coming issues that drive help that in the health business?

I am sorry.

In the health business I think you were mentioning third and fourth, second and third quarter all to be relatively positive and the fourth quarter a loss?

Sure, Tom we will cover that very briefly. John.

Yeah, Tom. Basically as we get more and more business under high deductible health plans, the accounting would have reflect those claims in the quarter that they are incurred. And so, you are going to have lower health claims in the first quarter when the deductible hasn’t been satisfied yet and you are going to have much higher health claims in the fourth quarter after the deductible is fully satisfied.

Got you. Okay, that makes sense. Alright thank you.

Thanks Tom.

Your next question is from Eric Berg with Lehman Brothers.

Thanks very much and good morning. My question concerns to securitization business well I realize you have paired back your exposure significantly in the warehouse and perhaps that is a big reason why you are more confident than you have been or you continue to be confident that this business will breakeven prospectively, I think you told us this in the past and yet we had a noticeable loss in the quarter. My question if you thought you had a handle on it first time and things turned out to be materially different from what you expected, why should we have confidence now that your forecast will be reasonable? Thank you.

Thanks Eric and good morning. I think I will let Jim –

Thank you Barry.

Jim?

Yeah, Barry. It’s true that the last earning call we indicated the expectation the business could breakeven for the rest of the year. What we didn’t know and nobody knew at that time was the extreme credit market disruption in March and in particular the very large moves and spreads over the Bear Stearns weekend in the middle of March and as you know the securitization inventory is daily mark-to-market and during that period the CMBS prices went down so much that it was marked right to whole loan prices, which meant that the hedging effect really went away. So, the extreme disruption that was the hedging got disrupted and you know that was an extraordinary event and absent such an extraordinary event we are pretty confident that we can manage with hedging and with a much lower inventory. As I think was pointed out during the prepared remarks at the end of April the inventory in the joint venture and remember 49% of business attributable to Principal stake the inventory in the joint venture was down to $540 million from $1.7 billion at the beginning of the year. The reduction reflects the very high quality well under written loans that have been in that inventory and we have seen very good demand both from some securitization where we securitize over 600 million in February and also from whole loan buyers. So, we are seeing very good demand for the little ones and while not under pressure we feel pretty confident that we can keep this inventory at a pretty low level and hedge it effectively absent any extreme disruption of the type that we saw in mid March.

And Eric I would just add that this a business we are committed to, we think this will come back and be a very profitable business force in the future. So, for our way I think this is not the time to discontinue the business or get out of it. Good days are ahead in this business we believe.

I have one final question relating to credit, I believe Mike Gersie said in his prepared remarks he cited little factors in explaining I hope I have this right. Why certain income securities were trading at material discounts to say amortizing costs, reasons other than credit, could you elaborate what you mean by technical factors in other words why would a bond in your opinion trade at a significant discount from amortized cost to an extended for reasons other than credit?

Okay, thanks Eric. We will ask Julia to answer that.

Yeah, Eric thank you very much. Well, the spread wide there is no question and what we mean by technical versus fundamental is that trading behavior was driven more by ownership of CMBS or the index or shorting that index as the case may be. So, I would say that what’s happened in March to get back to Jim’s comments about the disruption is that we had lots of players in the market that were needing to either liquidate their portfolio so they chose what was able to be liquidated which was high quality CMBS or they were needing to short a hedged position or change a hedged position, which affected the value of bonds. I will compare that to fundamental that affect spread, fundamental just predominantly around default rates increasing, foreclosures increasing, losses on actual commercial mortgages increasing. None of that had occurred. That's how I would compare technical to fundamental.

Very clear, Thank you Julia, I’m all set.

Thanks, Eric.

Your next question is from Suneet Kamath with Sanford Bernstein.

Thanks and good morning. I had a question about the full serves culmination business and the commentary about the low return on asset number going forward. I think you’ve talked about this qualitatively but you haven't quantified it in the past. I guess I just want to understand what the major driver here is, is it fund performance or the proliferation of target date funds or the move tomorrow larger cases. I mean what’s going on underneath? And then in terms of the pipeline Larry, I think you said that the pipeline for FSA is up I think it was 18%. Do you have a nominal amount of money in terms of the pipeline? And I think in the past you’ve talked about a close rate of 14%, is that still a good close rate over a 12 month period? Thanks.

Good morning Suneet. This is Larry, on the second one I will take that first, in terms of the close rate, the, you’re right. I mean the historical close rate actually Suneet, it’s been more than 12% somewhere in that 11%-12% range. And in the first quarter our close rate was closer to 18. So, you can see why it was such an outstanding sales quarter. And again I would not, well, I’m not going to sit here and predict an 18% close rate, I think that is support however, for our comments that our total retirement sweet capability as well as the strong investment performance of PGI and our partners continues to churn out, thus put us in a very strong position. So, again I don’t do the 18% as a statistical blip although I’m not going to sit here and predict because that would be that high every quarter. But again it’s typically been in that kind of 12% range, with 18% in the first quarter and again we remain optimistic because of the competitive nature of our offering. On the first question I think you were really looking there is any poor, whether some of the drivers that are kind of impacting the return, whether it’s ROA return the asset to ROE, I think again there is a number of factors but the one more dominant than anything else is simply that with our Total Retirement Suite initiative you are seeing more employer securities being embedded into the account values. And we showed it in our financial supplement today the employer securities are around 6% of the total account value that was about 4% a year ago that would have been 0% three or four years ago and the nature of employer securities is that the fees we get on that are primarily consulting and a small amount of administrative fee so you do not have the larger asset management fees and better than those employer securities, so what we are talking about here is I think it is important for everybody not to draw the conclusion that the our way going down is a bad thing the fact that we can compete on TRS and include employer securities allows us to have a bigger opportunity in the market to grow our total account value and asset base and we accept as a trade-off for that that the ROA is going to be slightly less but the net opportunity to grow full service accumulation earnings is definitely enhanced as a result of having employer security so I hope that helps a little bit.

No, it does. Just follow up in the pipeline you have a normal amount as of end of the quarter season?

A normal amount or the dollar amount the pipeline.

Exactly.

I think it tends to run somewhere in the sort of $20-25 billion range maybe closer to $30 billion in any point in time again depending a little bit on seasonality, Suneet.

Okay that is comparably up 18% that you mentioned in your comments.

Yes. That was a yes.

Okay got it, thanks very much. Perfect thank you.

Okay, thanks Suneet. You bet.

Your next question is from Steven Schwartz with Raymond James & Associates.

Hi everybody, just a couple of questions one more I guess a theory question article yesterday in the Washington journal about people looking to take loans into cash and therefore in case I was wondering if you had given the economic environment I was wondering if you all had had thoughts on that and how that they affect your business and then second you might have gotten this with time but I did not get it the health insurance guidance 45 to 55 million or 37 million in the first quarter maybe if you talk about what you see happening there?

Okay, Steven good morning this is Larry

Good morning Larry.

I will take one and John can follow up on your health question. In terms of the 401K loans or I will say maybe more broadly the impact of a slowing economy in what impact that has on 401K withdrawals is again quickly there are two ways that 401K loans members were how you could see the impact is slowing economy, one would be through actual hardship withdrawals some plans do have hardship withdrawal and you can have the opportunity as a 401K loans plan member to gain access to some of your account value through a financial hardship. I would say on that side of the withdrawal we are really not seeing any impact when we look at our experience in Q1 as compared to prior quarters no discernable trends I think that’s positive. On the other way you could access in a flowing economy would be through planned loans as your question was directed, there what I would say is we’re seeing a very, very slight uptick in a number of calls to our contact centre around plan loans, but we’re not really seeing any again discernable trend or increase in planned loans. So, it would be even call it a rounding error as it relates to planned loans and probably be to overstated, but there are at least a few more calls that are coming to the call center, but usually again once apprise of other opportunities and most planned members understand and it’s really not in their interest to take the planned loan and there are many other ways, more effective ways to handle some sort of slowing economy or financial emergency. And now I’ll ask John to talk about your health question.

Sure Steve. Last quarter we indicated that we expected health earnings for this year to be in the 35 to $40 million range.

Okay.

Because of the very strong results that we are seeing in the first quarter we’ve increased that $10 million to $15 million and we expect earnings to be in the 45 to $55 million range for the year.

Okay. I understand the loss ratios move up that really by that much I mean it’s that’s just strikes me as a considerable effect of where you are, you have been the reserve development?

Yeah, we have moved now to where we have about 67% of our health business is in higher deductible plans and that really will drive again heavy claims in the fourth quarter compared to the first quarter. So, you might expect something in the range of $12 million earnings in the second and third quarter and maybe a 5 to a $10 million loss in the fourth quarter to reflect the seasonality of the health claim based on high deductible plans.

Okay. I got it. Thank you.

Thank you.

$12 million each second quarter and third quarter.

Your next question is from Ed Spehar with Merrill Lynch.

Good morning, thank you. I had a couple of questions Larry in terms of thinking about the impact on ROA from TRS, can you give us some sense of, if you look at the just TRS portion of the book what percentage of the asset would be employer security and maybe more specifically and just thinking about the marginal ROA for this business, can you give us some sense of what it would be for the TRS and the alliance sales relative to your other sales?

Sure, good morning. First of all, if you focus around our Total Retirement Suite, again I think there is some tendency probably through our own communication that we have sort of tended to have you think that TRS is somehow kind of a subtext for employer securities and that’s not necessarily the case in other words you can find employer securities in medium sized plans and even some smaller sized plans where they maybe more private employer securities not necessarily public employer securities so the range for any given plan what percentage of it is employer securities obviously ranges all over the lot from 0% for many, to something maybe as high as 20-25% for some plans. Now again this add as all part of the underwriting process that we go through at front end and obviously we make sure as a part of our underwriting process that the revenue we are going to receive holistically whether it’s from the employer securities, from the other assets that’s going to pay us with a necessary ROA for the work we do so don’t read into that we have sort of different ROA targets by TRS versus plans that are not TRS or plans that have employer securities versus plans, that don’t have employer securities. And again, these are all just part of the underwriting process that we go through. In terms of your other question on marginal ROA actually I have to tell you that I do not think we look at the business that way, we don’t really think about trying to kind of write business on a sort of marginal basis that’s just never been a part of our philosophy here so our goal remains that that same sort of overall ROA that we have been talking about kind of in that 32 bases point range as we said in our comments so I hope that someone helpful.

Ed, this is Larry I would also add that this first quarter we just had $3.5 billion we had very little employer securities in that quarter so I don’t want anybody get the turn that prevented all of our businesses starting to build that way, in fact, I do not know that we had any large cases at all with these. Yeah we had, in the first quarter we had that $3.5 billion 6% of that was an employer security so again these things will having to flow back and forth and I think various comments are important to understand. Okay, likely to just follow up with one question. If you expect though that some of the business you are writing today has a lower ROA but higher ROE. Why would the return on assets outlook over the next several years according I think the comment that might made was 30 to 32 basis points over the next several years why wouldn’t that surely move lower over time given the mix of business.

Yeah, I mean, I think that is the point that Mike was trying to explain. Again if you go back two or three years there was no employer securities in the account valued so basically everything there were dollars what we are getting some sort of an embedded asset management fee in the business, now today is the employer securities don’t have this embedded asset management fee the other assets do whether they are proprietary or nonproprietary and it now depends on the long terms trends as to ultimately what percentage of account value in full service accumulation is employer securities as I said earlier that was about 4% of account value a year ago that is about 6% of account value today I don’t really know and cannot really sort of forecast for you where that may go I think it is always going to remain a relatively small percentage of total account value because again our value proposition is so strong whether it is at the small end, which may not involve employer securities, the mid sized plans, or the large plans so I think it will just depend on time and we’ll see where it goes, but I don’t think it will grow substantially but it might get a little higher at 6% it is today.

Okay thank you very much.

Your next question is from Tom Gallagher with Credit Suisse.

Good morning. I guess another one to Larry not to be the dead horse, but let me it take different approach at the whole mixture is going on in full service. If you calculate it as revenue yield full service accumulation revenue yield went down from about 98 basis points in 1Q last year to about 89 basis points this quarter and if I think about it that way what would be fee base revenue yield be on some of these larger what say bigger mandates that you have been winning recently if I think about 1000 or larger lives I mean it’s in number 50 basis points on average, is it 30 in a small case and what’s if 100 can you give us a little perspective on because I think it is important to think about. There’s going to be obviously higher associated class on the small end but at least we can understand that dynamic of revenue yield to help us think about at least what we will be seeing on the top line.

Okay, let me take it short that obviously I don’t know that I can relate to revenue yield that you may have defined but let me make some general comments that I think will be helpful to your question. We actually manage the full service accumulation business not as one single overall business. We have incredible discipline and how we go at the business and we actually manage it as a series of interrelated businesses. So when we think about full service accumulation, we actually manage it as a grouping of smaller plans, which we will for the sake of discussion call generally 0 to 5 million in assets kind of medium size plans that we would think somewhat between 5 and 15 million and then the larger plans somewhere between 50 million an above. And we have very, very detailed both revenue expense and overall P&L statements that we run for every one of those businesses. And we are extremely discipline Tom both in the underwriting at the front end as well as the ongoing expense management and ultimately the revenue yield if you will that you see to make sure that we are absolutely not subsidizing in order to get one business at one end at the expense of business at another. We have seen others make that mistake; we will absolutely not go down that path. So when you see the overall ROAs or ROEs of the full service accumulation business you can be confident that if you were to drill down and look at the small, medium or larger and you would see consistent ROAs or ROEs no matter whether you’re looking it is small plan or large plans.

Okay. That's helpful. And is there any broad range you could give us, I don’t know even an anecdote to think about what the fees as a percent of AUM would look like for a typical smaller plan versus a large plan. How extreme is that difference on enough that something you can share.

Well, I mean Again in terms of gross fees, in a total fees, somebody might pay I say for a very small plant it can be in the 250, 270 basis point range and for very large plans it would probably get down to where it is well under 100 basis points probably closing in on 70 or 80 basis points but the real driving factor around that, Tom is going to be whatever line of investment options they choose to put into the plan extant to wish for example they have index type options versus managed options, that is going to be the biggest driver of the fees they pay.

Okay. That's helpful. And just one more follow up for me. I guess this would be for Jim. The Global Asset Management fee based earnings guidance of $95 million, are you including any performance fees in that number.

The one word answer is yes. Looking at the first quarter, the fee earnings were somewhat depressed, or they were somewhat below trend I think really for three reasons. One is there were some extraordinary costs including $1 million of severance because of people in the more structured products area that got attributed to the fee business. Secondly, there were absolutely no performance fees or incentive fees in the first quarter. And thirdly, because of very low activity in real estate, there were no transaction or borrower fees or very low transaction and borrower fees in the first quarter. So, if you look at the fee business operating earnings, although it was nicely up on a year ago, it was because of the volume growth on the business. It was definitely below trend for those reasons and we have assumed much more of normalized trend thinking about that 95 million expectations. Clearly you’ve latched on to the piece that's most volatile and that could come in at or behind and that would probably be the most likely if you are using a crystal ball, the most likely thing to help us come in above or below that 95 million expectation that Mike expressed.

And that’s heavily weighted toward the fourth quarter, right?

Yeah, if you look at our past trend actually on quarterly operating earnings on our fee mandate business, the fourth quarter is usually above trend because of the incentive fees.

That’s the reason for most part you’re not accruing those, you are waiting to the fourth quarter to make sure those are in the bank?

Absolutely. There is no -- I mean there are -- we have from week-to-week and days-to-days some beliefs of what's likely to come through, but really you don’t know until you bank them and that’s when we account for them.

Okay, thanks.

Your next question is from Tamara Kravec with Banc of America.

Thank you, good morning.

Good morning.

First off congratulations, Barry and I wish you the best in your retirement.

Well, thank you.

You’re welcome and I just wanted to talk about the individual annuity business and ask how your hedging programs are faring and what -- there has been a lot of new product innovation quite a few of your peers are coming out with, with newer riders and other guaranteed provisions for those products. So, I would be curious for your outlook on that business in more detail and then a quick follow-up on the CMBS securitization just so I understand, your breakeven forecast for the rest of this year, is that assuming that -- some of the markets reverse or are you assuming that they stay the way they are? Thanks.

Thanks. Tamara, Let me take the last one very quickly, that does not anticipate recovery more extent. Just a business going forward as it is today and Larry you want to take this.

Sure, I’ll just comment briefly Tamara on the individual annuity and first of all we don’t unfortunately have the opportunity in these calls or maybe spend as much time on that business, what we call the retail annuity business as we’d like but there is you have certainly seen very, very consistent stable growth, quite actually quite impressive growth well above the industry average in the business and as because we have a very talented team there both the operations team and sales team that has been working very hard to expand distribution and you see that coming through quarter-after-quarter after quarter in increasing sales that are certainly well above the industry experience so we appreciate that you noticed that. In terms of hedging what I would say, is that know, we believe that we are extremely sophisticated certainly at the same level as all the other riders there are in that individual innovative business. We study intently the success of our hedging strategy. It will obviously vary from period to period but in rough terms, very rough terms and over the longer term we think our hedges are 80%-90% effective in accommodating the various risks of that business. So, we are comfortable with it. We have executed very well and plan to continue kind of grow that on a consistent basis as we have in the past.

Thank you.

Thank you.

Your next question is from Jeff Schuman with KBW.

Good morning, Larry, I was wondering if you could give us a few thoughts about the ING city street deal. First of all I am wondering, whether it’s large enough to, that means it will put a meaningful number of accounts sort of in place with a chance to gather some business. Secondly, does it signal any acceleration industry I mean in do you think, and thirdly can you remind us about your level of interest and appetite to look at properties like that that are focused maybe a little larger case than your current core business?

Sure Jeff, just a couple of comments on that, I mean obviously there's nothing or there is very little certainly nothing of that size that moves in the market we are not aware of. So you can just sort of take that as a given, I don't think anybody has been anymore active than we have around consolidation.

Does this signal new consolidation?

I don’t know, not necessarily, I tend to believe Jeff, that the issues that drove the city street transaction were relatively unique both to city and state street. First of all I don’t think that during venture structure was ever a long term structure, they don’t tend to be people who play well in joint ventures. Obviously City has their own issues, that they need to deal with so, I think it was more of a one off unique situation. In terms of what great opportunity answer absolutely yes, when these things go and play, let me just say that the clients don’t necessarily just march along. So, there would be a lot of opportunity it’s a very complicated block, it has a number of very small plans. And then a few handful’s of very large plans. It will be difficult, it will be complicated and will have the opportunity to kind of pick and choose where we want to play and how we want to play versus try and to have to absorb and digest the entire animal so, we will look forward to that opportunity.

Great, thanks a lot.

We have time for one more.

Your next question comes from Dan Johnson with Citadel Investments.

Could you run through the WM asset, the Washington mutual asset withdrawal outlook again and then secondly, the real estate loss in other can you give us a little more color on what that was and finally, the 34 basis points of ROA in ’07 FSA is that only include the third quarter adjustments or does that include some of the other adjustments such as the one you have identified in the first quarter of ’07? Thanks.

Dan this is Larry, I may take the first one and then the last one, in terms of the WM withdrawal let me try to be clear on that I mean not have been clear that was actually the 1.24 was actually a withdrawal attributable to their own home office plans, their own corporate plans, it was not withdrawal attributed to withdrawal of assets which had come to us through financial advisors as part of Washington Mutual distribution platform. So, this was a $1.24 billion withdrawal cash to their corporate plan they have been evaluating the platform on which they have that they have offered to Washington Mutual employees we are aware of that at the time of the acquisition, we as well said in the comments priced on into the acquisition. While we are sorry to see that go, it was not unexpected and again it’s not something that we haven’t taken into account. On the 34 basis points what I would say Dan is you want to think about that as kind of the noise [inaudible] are away. Unfortunately, there is never going to be a quarter that is noiseless, but you want to think about If I was building a long term model what I would expect the full service accumulation earnings to be I would be plugging in 34 basis points to day trending down to that sort of 30 to 32 basis points over time recognize on any quarter and it’s going to be bit a noise.

Julia?

Yeah, thanks Dan, it’s little unusual for us to show real estate losses let me describe that fund, that actually a real estate fund that PTI manages that Principal Life took a minority interest in and therefore we are using equity method of accounting and inside that real estate fund there is actually some CMBS, and as we have been describing in March CMBS had a huge parameter spread so that market change through in our other lines as a negative number. I hope you have obviously that reverse it though through the rest of the year but that’s what that is.

Thank you, very much.

Well, thank you all very much for being on the call today. We appreciate your interest and your support. I would like to express my sincere thanks to our investors and to the sales side analysts for time we have been able to work together over the last several years it’s been a pretty good experience for me and hope it has been for you. I thoroughly enjoyed it, I really do believe that this company is a better run company because our interaction with investors and with analyst then it keep us on our toes and we appreciate that and we think as I stated makes us well run company. I would also like to thank the board and senior management for allowing for the smooth transition that is undertaken between myself and Larry and then lastly I would just like to express my sincere thanks to our employees and managers and all the team that works here and express my sincere confidence and what we are going to achieve going forward. I know under Larry’s leadership and senior team we are going to do great things we have great employees and I can assure you this company will be focussed on doing what is right for our customers, doing what is right for our employees with integrity, and almost will be focussed on creating a sustaining shareholder value, so thank you so much and have a great day.

Thank you for participating in today’s conference call. This call will be available for replay beginning at approximately 1 pm. eastern time today until the end of the day May 13, 2008, 38445018 is the access code for the replay. The number to dial for the replay is 8006421687 for US and Canadian callers or 7066459291 for international callers. Thank you again for participating, you may now disconnect.