The Des Moines, Iowa-based financial services concern said net income for the quarter fell to $265.3 million, or 95 cents a share, from $293.9 million, or $1.01 a share.
Excluding items, the company posted "operating" earnings of 87 cents a share, below Thomson Financial's analyst estimate of 93 cents a share.
"We were very pleased with our core asset management and asset accumulation businesses, where continued strong execution drove strong performance, but disappointed with first quarter results for our insurance businesses, which were heavily impacted by unfavorable claims experience," said J. Barry Griswell, chairman and CEO.
Principal said profit at its individual life insurance division fell to $15.4 million from $27.1 million, due primarily to unfavorable death claim costs, net of reinsurance, and reduced investment income resulting from a lower asset base, reflecting the release of excess statutory reserves to corporate a year earlier.
Health division earnings fell to $11.8 million from $24.2 million a year earlier, as "unfavorable experience related to prior-year claim development" reduced division earnings by about $15 million.
In light of the negative results in its health division, primarily related to high-deductible health plans, Principal cut the high-end of its full-year EPS guidance. The company now expects to earn $3.80 to $3.92 a share, compared with prior expectations of $3.80 to $3.95.
Shares of Principal were off 60 cents, or 0.9%, to $63.49 in recent after-hours trading.