Document:

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                                                                     Exhibit 4.2

                           CERTIFICATE OF DESIGNATIONS

                                       OF

                SERIES B NON-CUMULATIVE PERPETUAL PREFERRED STOCK

                                       OF

                         PRINCIPAL FINANCIAL GROUP, INC.

                                 --------------

            Principal Financial Group, Inc., a Delaware corporation (the
"Corporation"), does hereby certify:

            That the following resolutions were duly adopted by the Board of
Directors of the Corporation (the "Board of Directors") at a meeting duly
convened and held on June 7, 2005 (the "June 7 Resolutions") and by the Pricing
Committee (the "Committee") of the Board of Directors by unanimous written
consent on June 14, 2005 (the "June 14 Resolutions") pursuant to authority
conferred upon the Board of Directors by the provisions of the amended and
restated certificate of incorporation of the Corporation authorizing the
Corporation to issue up to 500 million shares of preferred stock, par value
$0.01 per share ("Preferred Stock"), and pursuant to authority conferred upon
the Committee in accordance with Section 141(c) of the General Corporation Law
of the State of Delaware, Article III, Section 3.01 of the amended and restated
by-laws of the Corporation (the "by-laws") and resolutions of the Board of
Directors adopted at a meeting duly convened and held on June 7, 2005:

            1. On June 7, 2005, the Board of Directors adopted the following
            resolution authorizing the Committee to act on behalf of the Board
            of Directors in connection with the issuance of a new series of
            Preferred Stock:

            "RESOLVED, that Principal Financial Group, Inc. (the "Corporation")
be, and it hereby is, authorized to issue shares of the Corporation's Series A
Non-Cumulative Perpetual Preferred Stock, par value $0.01 per share (the "Series
A Preferred Shares"), and shares of the Series B Non-Cumulative Perpetual
Preferred Stock, par value $0.01 per share (the "Series B Preferred Shares", and
together with the Series A Preferred Shares, the "Preferred Shares"), with an
initial public offering price of the Preferred Shares not to exceed US$550
million in the aggregate, and individually not to exceed US$325 million per
series, to be issued from time to time, together or separately, upon such terms
as the Pricing Committee (as defined below) or the officers designated below
shall determine, as provided in the immediately succeeding resolutions."

            2. On June 14, 2005, the Committee, pursuant to the authority
            conferred upon it by Section 141(c) of the General Corporation Law
            of the State of Delaware, Article III, Section 3.01 of the by-laws
            of the

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            Corporation and the June 7 Resolutions, duly adopted the following
            resolution:

            "RESOLVED, that pursuant to a resolution of the Board of Directors
(the "Board of Directors") of Principal Financial Group, Inc., a Delaware
corporation (the "Corporation") adopted on June 7, 2005, the issuance of two
series of preferred stock of the Corporation, designated as the Series A
Non-Cumulative Perpetual Preferred Stock, par value $0.01 per share (the "Series
A Preferred Shares") and the Series B Non-Cumulative Perpetual Preferred Stock,
par value $0.01 per share (the "Series B Preferred Shares"), respectively, is
hereby authorized, and the designation, voting powers, preferences and relative,
participating, optional or other special rights, and qualifications, limitations
and restrictions of the Series A Preferred Shares and Series B Preferred Shares,
in addition to those set forth in the amended and restated certificate of
incorporation of the Corporation, are hereby fixed as set forth on Annex A and
Annex B, respectively."

            3. Accordingly, the designation, voting powers, preferences and
            relative, participating, optional or other special rights, and
            qualifications, limitations and restrictions of the Series B
            Preferred Shares, as set forth in Annex B to the June 14
            Resolutions, have been fixed as follows:

            SECTION 1. Designation. The distinctive serial designation of such
series is "Series B Non-Cumulative Perpetual Preferred Stock" ("Series B
Preferred Stock"). Each share of Series B Preferred Stock shall be identical in
all respects to every other share of Series B Preferred Stock.

            SECTION 2. Number of Shares. The number of shares of Series B
Preferred Stock shall be 10,000,000. Such number may from time to time be
increased (but not in excess of the total number of authorized shares of
Preferred Stock) or decreased (but not below the number of shares of Series B
Preferred Stock then outstanding) by the Board of Directors. Shares of Series B
Preferred Stock that are redeemed, purchased or otherwise acquired by the
Corporation shall be cancelled and shall revert to authorized but unissued
shares of Preferred Stock undesignated as to series.

            SECTION 3. Definitions. As used herein with respect to the Series B
Preferred Stock:

            "3-Month LIBOR" means, with respect to any Dividend Period, the rate
(expressed as a percentage per annum) for deposits in U.S. dollars for a 3-month
period commencing on the first day of that Dividend Period that appears on
Telerate Page 3750 as of 11:00 a.m. (London time) on the Dividend Determination
Date for that Dividend Period. If such rate does not appear on Telerate Page
3750, 3-Month LIBOR will be determined on the basis of the rates at which
deposits in U.S. dollars for a 3-month period commencing on the first day of
that Dividend Period and in a principal amount of not less than $1,000,000 are
offered to prime banks in the London interbank market by four major

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banks in the London interbank market selected by the Calculation Agent, at
approximately 11:00 a.m., London time on the Dividend Determination Date for
that Dividend Period. The Calculation Agent will request the principal London
office of each of such banks to provide a quotation of its rate. If at least two
such quotations are provided, 3-Month LIBOR with respect to that Dividend Period
will be the arithmetic mean (rounded upward if necessary to the nearest .00001
of 1%) of such quotations. If fewer than two quotations are provided, 3-Month
LIBOR with respect to that Dividend Period will be the arithmetic mean (rounded
upward if necessary to the nearest .00001 of 1%) of the rates quoted by three
major banks in New York City selected by the Calculation Agent, at approximately
11:00 a.m., New York City time, on the first day of that Dividend Period for
loans in U.S. dollars to leading European banks for a 3-month period commencing
on the first day of that Dividend Period and in a principal amount of not less
than $1,000,000. However, if the banks selected by the Calculation Agent to
provide quotations are not quoting as described above, 3-Month LIBOR for that
Dividend Period will be the same as 3-Month LIBOR as determined for the previous
Dividend Period. The establishment of 3-Month LIBOR for each Dividend Period by
the Calculation Agent shall (in the absence of manifest error) be final and
binding.

            "10-year Treasury CMT" means the rate determined in accordance with
the following provisions:

            (a) With respect to any Dividend Determination Date and the Dividend
      Period that begins immediately thereafter, the 10-year Treasury CMT means
      the rate per annum for deposits for a 10-year period commencing on the
      Dividend Determination Date displayed on the Bloomberg interest rate page
      most nearly corresponding to Telerate Page 7051 containing the caption
      "...Treasury Constant Maturities... Federal Reserve Board Release
      H.15...Mondays Approximately 3:45 P.M.," and the column for the Designated
      CMT Maturity Index.

            (b) If such rate is no longer displayed on the relevant page, or is
      not so displayed by 3:00 P.M., New York City time, on the applicable
      Dividend Determination Date, then the 10-year Treasury CMT for such
      Dividend Determination Date will be such treasury constant maturity rate
      for the Designated CMT Maturity Index as is published in H.15(519).

            (c) If such rate is no longer displayed on the relevant page, or if
      not published by 3:00 P.M., New York City time, on the applicable Dividend
      Determination Date, then the 10-year Treasury CMT for such Dividend
      Determination Date will be such constant maturity treasury rate for the
      Designated CMT Maturity Index (or other United States Treasury rate for
      the Designated CMT Maturity Index) for the applicable Dividend
      Determination Date as may then be published by either the Board of
      Governors of the Federal Reserve System or the United States Department of
      the Treasury that the Calculation Agent determines to be comparable to the
      rate formerly displayed on the

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      Bloomberg interest rate page most nearly corresponding to Telerate Page
      7051 and published in H.15(519).

            (d) If such information is not provided by 3:00 P.M., New York City
      time, on the applicable Dividend Determination Date, then the 10-year
      Treasury CMT for such Dividend Determination Date will be calculated by
      the Calculation Agent and will be a yield to maturity, based on the
      arithmetic mean of the secondary market offered rates as of approximately
      3:30 P.M., New York City time, on such Dividend Determination Date
      reported, according to their written records, by three leading primary
      United States government securities dealers in The City of New York (each,
      a "Reference Dealer") selected by the Calculation Agent (from five such
      Reference Dealers selected by the Calculation Agent and eliminating the
      highest quotation (or, in the event of equality, one of the highest) and
      the lowest quotation (or, in the event of equality, one of the lowest)),
      for the most recently issued direct noncallable fixed rate obligations of
      the United States ("Treasury Debentures") with an original maturity of
      approximately the Designated CMT Maturity Index and a remaining term to
      maturity of not less than such Designated CMT Maturity Index minus one
      year.

            (e) If the Calculation Agent is unable to obtain three such Treasury
      Debentures quotations, the 10-year Treasury CMT for the applicable
      Dividend Determination Date will be calculated by the Calculation Agent
      and will be a yield to maturity based on the arithmetic mean of the
      secondary market offered rates as of approximately 3:30 P.M., New York
      City time, on the applicable Dividend Determination Date of three
      Reference Dealers in The City of New York (from five such Reference
      Dealers selected by the Calculation Agent and eliminating the highest
      quotation (or, in the event of equality, one of the highest) and the
      lowest quotation (or, in the event of equality, one of the lowest)), for
      Treasury Debentures with an original maturity of the number of years that
      is the next highest to the Designated CMT Maturity Index and a remaining
      term to maturity closest to the Designated CMT Maturity Index and in an
      amount of at least $100 million.

            (f) If three or four (and not five) of such Reference Dealers are
      quoting as set forth above, then the 10-year Treasury CMT will be based on
      the arithmetic mean of the offered rates obtained and neither the highest
      nor lowest of such quotes will be eliminated; provided, however, that if
      fewer than three Reference Dealers selected by the Calculation Agent are
      quoting as set forth above, the 10-year Treasury CMT with respect to the
      applicable Dividend Determination Date will remain the 10-year Treasury
      CMT for the immediately preceding Dividend Period. If two Treasury
      Debentures with an original maturity as described in the second preceding
      sentence have remaining terms to maturity equally close to the Designated
      CMT Maturity Index, then the quotes for the Treasury Debentures with the
      shorter remaining term to maturity will be used.

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            "30-year Treasury CMT" has the meaning specified under the
definition of 10-year Treasury CMT, except that (i) each reference to "10-year"
in the definition of the "10-year Treasury CMT" will be "30-year" for the
purposes of the "30-year Treasury CMT" and (ii) the Designated CMT Maturity
Index for the 30-year Treasury CMT shall be 30 years.

            "Adjustable Rate" has the meaning assigned to such term in Section
4(b)(ii).

            "Adjusted Shareholders' Equity Amount" has the meaning assigned to
such term in Section 5(e).

            "Annual Statement" has the meaning assigned to such term in Section
5(e).

            "Benchmark Quarter End Test Date" has the meaning assigned to such
term in Section 5(a)(ii).

            "Benchmark Rates" has the meaning assigned to such term in Section
4(b)(ii).

            "Bloomberg" means Bloomberg Financial Markets Commodities News.

            "Business Day" means each Monday, Tuesday, Wednesday, Thursday or
Friday on which banking institutions in the City of New York are not authorized
or obligated by law, regulation or executive order to close.

            "Calculation Agent" means Computershare Trust Company, Inc., or its
successor appointed by the Corporation, acting as calculation agent.

            "Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act. The Depository
Trust Corporation will be the initial Clearing Agency.

            "Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.

            "Commission" has the meaning assigned to such term in Section 5(e).

            "Common Stock" means the common stock of the Corporation.

            "Company Action Level RBC" has the meaning assigned to such term in
Section 5(e).

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            "Consolidated Net Income Amount" has the meaning assigned to such
term in Section 5(e).

            "Covered Insurance Subsidiaries" has the meaning assigned to such
term in Section 5(e).

            "Covered Insurance Subsidiaries' Most Recent Weighted Average NAIC
RBC Ratio" has the meaning assigned to such term in Section 5(e).

            "Designated CMT Maturity Index" means the original period to
maturity of the U.S. Treasury securities with respect to which the 10-year
Treasury CMT or 30-year Treasury CMT, as applicable, will be calculated (which
are ten years and thirty years, respectively).

            "Dividend Declaration Date" has the meaning assigned to such term in
Section 5(a).

            "Dividend Determination Date" means the second London Banking Day
immediately preceding the first day of the relevant Dividend Period in the
Floating Rate Period.

            "Dividend Parity Stock" has the meaning assigned to such term in
Section 8(b).

            "Dividend Payment Date" has the meaning assigned to such term in
Section 4(a).

            "Dividend Period" means each period commencing on a Dividend Payment
Date and continuing to but not including the next succeeding Dividend Payment
Date (except that the first Dividend Period shall commence upon the date of
initial issuance of the Series B Preferred Stock).

            "Dividend Rate" means the rate at which dividends will accrue in
respect of any Dividend Period, as determined pursuant to the terms of Section
4, whether by Remarketing or otherwise.

            "Election Date" means, with respect to any proposed Remarketing, a
date as determined by the Corporation that is no later than the fifth Business
Day prior to the proposed Remarketing Date.

            "Final Quarter End Test Date" and "Preliminary Quarter End Test
Date" have the meanings assigned to such terms in Section 5(e).

            "Fixed Rate" means the Dividend Rate during the Initial Fixed Rate
Period and any subsequent Fixed Rate Period as determined by a Remarketing.

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            "Fixed Rate Period" means the Initial Fixed Rate Period and each
period set by the Corporation during a Remarketing for which the Fixed Rate
determined in such Remarketing will apply; provided, however, that a Fixed Rate
Period must be for a duration of at least six months and may not end on a day
other than a Dividend Payment Date.

            "Floating Rate" means the Dividend Rate during a Floating Rate
Period calculated pursuant to Section 4(b)(ii).

            "Floating Rate Period" means any period during which a Floating Rate
is in effect.

            "General Account Admitted Assets" has the meaning assigned to such
term in Section 5(e).

            "Initial Dividend Rate" means 6.518% per annum.

            "Initial Fixed Rate Period" means June 17, 2005 until the Dividend
Payment Date in June 2035.

            "Insurance Subsidiary" has the meaning assigned to such term in
Section 5(e).

            "Issue Date" means the initial date of delivery of shares of Series
B Preferred Stock.

            "Junior Stock" means the Common Stock and any other class or series
of stock of the Corporation hereafter authorized over which Series B Preferred
Stock has preference or priority in the payment of dividends and in the
distribution of assets on any liquidation, dissolution or winding up of the
Corporation.

            "Liquidation Preference" has the meaning assigned to such term in
Section 6(a).

            "London Banking Day" means any day on which commercial banks are
open for general business (including dealings in deposits in U.S. dollars) in
London.

            "Model Act" has the meaning assigned to such term in Section 5(e).

            "NAIC" has the meaning assigned to such term in Section 5(e).

            "New Common Equity Amount" has the meaning assigned to such term in
Section 5(e).

            "Notice of Election" has the meaning assigned to such term in
Section 4(b)(iii).

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            "Owner" means each Person who is the beneficial owner of a Series B
Preferred Stock Certificate as reflected in the records of the Clearing Agency
or, if a Clearing Agency Participant is not the Owner, then as reflected in the
records of a Person maintaining an account with the Clearing Agency (directly or
indirectly, in accordance with the rules of the Clearing Agency).

            "Parity Stock" means any other class or series of stock of the
Corporation that ranks on a parity with Series B Preferred Stock in the payment
of dividends and in the distribution of assets on any liquidation, dissolution
or winding up of the Corporation. Any other class or series of stock of the
Corporation will not be deemed to rank senior to (or other than on a parity
with) the Series B Preferred Stock in the payment of dividends solely because
such other class or series of stock does not include the limitation on payment
of dividends (and the related exceptions) provided for in Section 5 and,
accordingly, the Corporation may pay dividends on the shares of any such other
class of series of stock that is otherwise Parity Stock for periods during which
the Corporation may not pay dividends on the Series B Preferred Stock because of
such limitation without violating the requirements of Section 4(d).

            "Person" means any individual, corporation, partnership, joint
venture, trust, limited liability company or corporation, unincorporated
organization or government or any agency or political subdivision thereof.

            "Quarter End" has the meaning assigned to such term in Section 5(e).

            "Remarketing" means the conduct by which a Fixed Rate shall be
determined in accordance with the Remarketing Procedures.

            "Remarketing Agent" means Lehman Brothers, Inc., its successors or
assigns, or such other remarketing agent appointed to such capacity by the
Corporation.

            "Remarketing Agreement" means the agreement between the Corporation
and Lehman Brothers Inc., as Remarketing Agent, dated as of the Issue Date.

            "Remarketing Date" means any Business Day no later than the third
Business Day prior to any Remarketing Settlement Date.

            "Remarketing Procedures" means those procedures set forth in Section
4(b)(iii) hereof.

            "Remarketing Settlement Date" means, to the extent applicable, (i)
the first Business Day of the next Dividend Period following the expiration of
the Initial Fixed Rate Period; (ii) any Dividend Payment Date during a Floating
Rate Period; or (iii) any Dividend Payment Date during a time in which shares of
Series B Preferred Stock are not redeemable in a subsequent Fixed Rate Period
and the date set by the Corporation during a time in which shares of Series B
Preferred Stock are redeemable in a subsequent Fixed Rate Period.

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            "Securities Act" has the meaning assigned to such term in Section
5(e).

            "Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended.

            "Series B Preferred Stock Certificate" means a certificate
evidencing ownership of a share or shares of Series B Preferred Stock.

            "Telerate Page 3750" means the display page so designated on the
Moneyline/Telerate Service (or such other page as may replace that page on that
service, or such other service as may be nominated as the information vendor,
for the purpose of displaying rates or prices comparable to London Interbank
Offered Rate for U.S. dollar deposits).

            "Telerate Page 7051" means the display page so designated on the
MoneyLine/Telerate Service (or any successor service), on such page (or any
other page as may replace such page on that service), for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519).

            "Total Adjusted Capital" has the meaning assigned to such term in
Section 5(e).

            "Trailing Four Quarters Consolidated Net Income" has the meaning
assigned to such term in Section 5(e).

            "U.S. GAAP" has the meaning assigned to such term in Section 5(e).

            "Year End" has the meaning assigned to such term in Section 5(e).

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            SECTION 4. Dividends.

            (a) General.

            (i) DIVIDEND PAYMENT DATES, DIVIDEND RATE, ETC. Subject to Section
      5, holders of Series B Preferred Stock shall be entitled to receive, when,
      as and if declared by the Board of Directors, but only out of funds
      legally available therefor, cash dividends at the applicable Dividend Rate
      applied to the Liquidation Preference per share, accruing on each share of
      Series B Preferred Stock (i) if issued on the Issue Date, from June 17,
      2005, and (ii) if issued thereafter, from (x) the date of issue if such
      date is a Dividend Payment Date and (y) from the immediately preceding
      Dividend Payment Date if the date of issue is other than a Dividend
      Payment Date, payable quarterly on the 30th day of each March, June,
      September and December in each year (each such date a "Dividend Payment
      Date"), commencing on September 30, 2005, with respect to the Dividend
      Period (or portion thereof) ending on the day preceding such respective
      Dividend Payment Date, to holders of record on the respective date, not
      more than 60 nor less than 10 days preceding such Dividend Payment Date,
      fixed for that purpose by the Board of Directors in advance of payment of
      each particular dividend. During the Initial Fixed Rate Period, the
      Dividend Rate shall be the Initial Dividend Rate. For each Dividend Period
      thereafter, the Dividend Rate shall be determined in accordance with
      Section 4(b).

            (ii) BUSINESS DAY CONVENTION. If any Dividend Payment Date with
      respect to a Fixed Rate Period is not a Business Day, then dividends will
      be payable on the first Business Day following such Dividend Payment Date,
      without accrual to the actual payment date. If any Dividend Payment Date
      with respect to a Floating Rate Period is not a Business Day, then
      dividends will be payable on the first Business Day following such
      Dividend Payment Date unless such day is in the next calendar month, in
      which case dividends shall be payable on the first Business Day preceding
      such Dividend Payment Date and dividends, in each case, shall accrue to
      the actual payment date.

            (iii) DAY COUNT CONVENTION. The amount of dividends payable per
      share of Series B Preferred Stock on each Dividend Payment Date relating
      to a Fixed Rate Period will be computed on the basis of a 360-day year of
      twelve-30 day months. The amount of dividends payable per share of Series
      B Preferred Stock on each Dividend Payment Date relating to a Floating
      Rate Period will be computed by multiplying the per annum Dividend Rate in
      effect for such Dividend Period by a fraction, the numerator of which will
      be the actual number of days in such Dividend Period (or portion thereof)
      (determined by including the first day thereof and excluding the last day
      thereof) and the denominator of which will be 360, and multiplying the
      rates obtained by $25.

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            (b) Remarketing.

            (i) FIXED RATE PERIOD. Prior to the expiration of the Initial Fixed
      Rate Period, the Corporation will have the option to remarket the Series B
      Preferred Stock to establish a new Fixed Rate with respect to the Series B
      Preferred Stock (to be in effect after the Initial Fixed Rate Period);
      provided, however, that (A) the Corporation may effect a Remarketing only
      if and for so long as the Series B Preferred Stock is issued solely in
      global, fully registered form to a Clearing Agency and (B) if the
      Corporation has initiated a Remarketing but at or prior to the related
      Remarketing Settlement Date the Series B Preferred Stock is no longer
      issued solely in global, fully registered form to a Clearing Agency, the
      Remarketing shall terminate and shall not be consummated. In the event
      that clause (A) or clause (B) of the proviso set forth in the previous
      sentence applies, the Dividend Rate for the next succeeding Dividend
      Period shall be determined pursuant to Section 4(b)(ii). Any new Fixed
      Rate so established will be in effect for such Fixed Rate Period as the
      Corporation determines in connection with the Remarketing, provided that a
      Fixed Rate Period must be for a duration of at least six months and must
      end on a Dividend Payment Date. Prior to the expiration of any Fixed Rate
      Period after the Initial Fixed Rate Period, the Corporation will have the
      option, subject to the proviso set forth in the first sentence of this
      Section 4(b)(i), to remarket the Series B Preferred Stock to establish a
      new Fixed Rate for a new Fixed Rate Period (to be in effect after the
      expiration of the then current Dividend Period).

                  If the Remarketing Agent, pursuant to the Remarketing
      Procedures described in Section 4(b)(iii), has determined that it will be
      able to remarket all Series B Preferred Stock tendered or deemed tendered
      for purchase in the Remarketing at a Fixed Rate and at the per share
      Liquidation Preference, prior to 4:00 P.M., New York City time, on any
      Remarketing Date, the Dividend Rate for the new Fixed Rate Period will be
      the Fixed Rate determined by the Remarketing Agent, which will be the rate
      per annum (rounded to the nearest one-thousandth (0.001) of one percent
      per annum) that the Remarketing Agent determines, in its sole judgment, to
      be the lowest Fixed Rate per annum that will enable it to remarket all
      Series B Preferred Stock tendered or deemed tendered for Remarketing at
      the per share Liquidation Preference.

            (ii) FLOATING RATE PERIOD. If the Series B Preferred Stock is not
      redeemed and the Corporation does not elect or is not entitled to remarket
      the Series B Preferred Stock pursuant to this Section 4 or has terminated
      a Remarketing or if the Remarketing Agent is unable to remarket all of the
      Series B Preferred Stock tendered or deemed tendered for a purchase price
      of $25 per share of Series B Preferred Stock pursuant to the Remarketing
      procedures described above or if the Remarketing has been terminated in
      accordance with the requirements of Section 4(b)(i)(B), the Dividend Rate
      shall be the Floating Rate and the new Dividend Period shall be a Floating
      Rate Period, subject to the

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      Corporation's right to subsequently remarket the Series B Preferred Stock
      to again establish a Fixed Rate for a new Fixed Rate Period. During any
      Floating Rate Period, the Corporation may elect to remarket the Series B
      Preferred Stock prior to any Dividend Payment Date relating to a Floating
      Rate Period in order to again establish a new Fixed Rate for a new Fixed
      Rate Period (to be in effect after the expiration of the then current
      Dividend Period).

                  The Calculation Agent shall calculate the Floating Rate on the
      applicable Dividend Determination Date relating to that Floating Rate
      Period as follows:

                  Except as provided below, the Floating Rate for any Floating
      Rate Period for the Series B Preferred Stock will be reset quarterly and
      will be equal to the Adjustable Rate plus 2.10%. The "Adjustable Rate" for
      any Dividend Period will be equal to the highest of the 3-month LIBOR, the
      10-year Treasury CMT and the 30-year Treasury CMT (collectively, the
      "Benchmark Rates") for such Dividend Period during the Floating Rate
      Period. In the event that the Calculation Agent determines in good faith
      that for any reason:

            (1) any one of the Benchmark Rates cannot be determined for any
            Dividend Period, the Adjustable Rate for such Dividend Period will
            be equal to the higher of whichever two of such rates can be so
            determined;

            (2) only one of the Benchmark Rates can be determined for any
            Dividend Period, the Adjustable Rate for such Dividend Period will
            be equal to whichever such rate can be so determined; or

            (3) none of the Benchmark Rates can be determined for any Dividend
            Period, the Adjustable Rate for the preceding Dividend Period will
            be continued for such Dividend Period, provided that if such
            preceding Dividend Period was a Fixed Rate Period, the Fixed Rate
            for the preceding Dividend Period will be continued for such
            Dividend Period.

                  Each of the 10-year Treasury CMT and the 30-year Treasury CMT
      shall be rounded to the nearest hundredth (0.01) of one percent and
      3-month LIBOR shall be rounded to the nearest one-hundred-thousandth
      (0.00001) of one percent. The Floating Rate with respect to each Dividend
      Period that occurs within a Floating Rate Period will be calculated as
      promptly as practicable by the Calculation Agent according to the
      appropriate method described above.

                  If a new Fixed Rate for a new Fixed Rate Period is set in a
      Remarketing (as described in this Section 4), a new Fixed Rate Period
      shall commence following the expiration of the then current Dividend
      Period. If a new Fixed Rate for a new Fixed Rate Period is not set, for
      any reason, including after the expiration of the Initial Fixed Rate
      Period, in accordance with the terms of

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      Section 4(b)(iii) hereof, a Floating Rate Period and the corresponding
      Floating Rate determined or redetermined in accordance with this Section
      4(b)(ii) shall be in effect unless and until the Corporation remarkets the
      Series B Preferred Stock and sets a new Fixed Rate for a new Fixed Rate
      Period in accordance with this Section 4(b)(i) and 4(b)(iii).

            (iii) REMARKETING PROCEDURES. If the Corporation elects to conduct a
      Remarketing of the Series B Preferred Stock for the purpose of
      establishing a new Fixed Rate for a new Fixed Rate Period, the Corporation
      shall, not less than 10 nor more than 35 Business Days prior to the
      related Election Date, notify in writing the Clearing Agency, the
      Remarketing Agent and the Calculation Agent. Such notice shall describe
      the Remarketing and shall indicate the length of the proposed new Fixed
      Rate Period, the proposed Remarketing Date and any redemption provisions
      that will apply during such new Fixed Rate Period. The Corporation shall
      have the right to terminate a Remarketing on any day prior to the date of
      the Remarketing of the Series B Preferred Stock by notice of such
      termination to the Clearing Agency (or the holders, as applicable), the
      Remarketing Agent and the Calculation Agent.

                  Not later than 4:00 P.M., New York City time, on an Election
      Date, each Owner of Series B Preferred Stock may give, through the
      facilities of the Clearing Agency, a written notice to the Corporation of
      its election ("Notice of Election") (i) to retain and not to have all or
      any portion of the Series B Preferred Stock owned by it remarketed in the
      Remarketing or (ii) to tender all or any portion of such Series B
      Preferred Stock for purchase in the Remarketing (such portion, in either
      case, is to be at the per share Liquidation Preference or any integral
      multiple thereof). Any Notice of Election given to the Corporation will be
      irrevocable and may not be conditioned upon the level at which the Fixed
      Rate is established in the Remarketing. Promptly after 4:30 P.M., New York
      City time, on such Election Date, the Corporation, based on the Notices of
      Election received by it through the Clearing Agency prior to such time,
      will notify the Remarketing Agent of the number of shares of Series B
      Preferred Stock to be retained by holders of Series B Preferred Stock and
      the number of shares of Series B Preferred Stock tendered or deemed
      tendered for purchase in the Remarketing.

                  If any holder gives a Notice of Election to tender shares of
      Series B Preferred Stock as described in (ii) in the immediately preceding
      paragraph, the Series B Preferred Stock so subject to such Notice of
      Election will be deemed tendered for purchase in the Remarketing,
      notwithstanding any failure by such holder to deliver or properly deliver
      such Series B Preferred Stock to the Remarketing Agent for purchase. If
      any holder of shares of Series B Preferred Stock fails timely to deliver a
      Notice of Election, as described above, such shares of Series B Preferred
      Stock will be deemed tendered for purchase in such Remarketing,
      notwithstanding such failure or the failure by such holder to deliver

                                      -13-
<PAGE>

      or properly deliver such shares of Series B Preferred Stock to the
      Remarketing Agent for purchase.

                  The right of each holder of Series B Preferred Stock to have
      shares of Series B Preferred Stock tendered for purchase in the
      Remarketing shall be limited to the extent that (i) the Remarketing Agent
      conducts a Remarketing pursuant to the terms of the Remarketing Agreement,
      (ii) Series B Preferred Stock tendered have not been called for
      redemption, (iii) the Remarketing Agent is able to find a purchaser or
      purchasers for tendered Series B Preferred Stock at a Fixed Rate and (iv)
      such purchaser or purchasers deliver the purchase price therefore to the
      Remarketing Agent.

                  Any holder of Series B Preferred Stock that desires to
      continue to retain a number of Series B Preferred Stock, but only if the
      Fixed Rate is not less than a specified rate per annum, shall submit a
      Notice of Election to tender such Series B Preferred Stock pursuant to
      this Section 4(b)(iii) and separately notify the Remarketing Agent of its
      interest at the telephone number set forth in the notice of Remarketing
      delivered pursuant to this Section 4(b)(iii). If such holder so notifies
      the Remarketing Agent, the Remarketing Agent will give priority to such
      holder's purchase of such number of Series B Preferred Stock in the
      Remarketing, provided that the Fixed Rate is not less than such specified
      rate.

                  If holders submit Notices of Election to retain all of the
      Series B Preferred Stock then outstanding, the Fixed Rate will be the rate
      determined by the Remarketing Agent, in its sole discretion, as the rate
      that would have been established had a Remarketing been held on the
      related Remarketing Date.

                  On any Remarketing Date on which the Remarketing is to be
      conducted, the Remarketing Agent will use commercially reasonable efforts
      to remarket, at a price equal to 100% of the per share Liquidation
      Preference, shares of Series B Preferred Stock tendered or deemed tendered
      for purchase. If, as a result of such efforts, on any Remarketing Date,
      the Remarketing Agent has determined that it will be able to remarket all
      shares of Series B Preferred Stock tendered or deemed tendered for
      purchase in the Remarketing at a Fixed Rate and at the per share
      Liquidation Preference, prior to 4:00 P.M., New York City time, on such
      Remarketing Date, the Remarketing Agent will determine the Fixed Rate,
      which will be the rate per annum (rounded to the nearest one-thousandth
      (0.001) of one percent per annum) which the Remarketing Agent determines,
      in its sole judgment, to be the lowest Fixed Rate per annum, if any, that
      will enable it to remarket all shares of Series B Preferred Stock tendered
      or deemed tendered for Remarketing at the per share Liquidation
      Preference. By approximately 4:30 P.M., New York City time, on a
      Remarketing Date, the Remarketing Agent shall advise, by telephone, (i)
      the Clearing Agency Participant, the Corporation and the Calculation Agent
      of any new Fixed Rate established pursuant to the Remarketing and the
      number of remarketed shares of Series B Preferred Stock sold in the

                                      -14-
<PAGE>

      Remarketing; (ii) each purchaser of a remarketed share of Series B
      Preferred Stock (or the Clearing Agency Participant thereof) of such new
      Fixed Rate and the number of remarketed shares of Series B Preferred Stock
      such purchaser is to purchase; and (iii) each purchaser to give
      instructions to its Clearing Agency Participant to pay the purchase price
      on the Remarketing Settlement Date in same day funds against delivery of
      the remarketed Series B Preferred Stock purchased through the facilities
      of the Clearing Agency Participant.

                  If the Remarketing Agent is unable to remarket by 4:00 P.M.,
      New York City time on the third Business Day prior to the Remarketing
      Settlement Date, all shares of Series B Preferred Stock tendered or deemed
      tendered for purchase at the per share Liquidation Preference, the
      Dividend Rate for the next Dividend Period shall be the Floating Rate and
      the new Dividend Period shall be a Floating Rate Period. In such case, no
      shares of Series B Preferred Stock will be sold in the Remarketing and
      each holder will continue to hold its shares of Series B Preferred Stock
      at such Floating Rate during such Floating Rate Period.

                  All shares of Series B Preferred Stock tendered or deemed
      tendered in the Remarketing will be automatically delivered to the account
      of the Remarketing Agent through the facilities of the Clearing Agency
      against payment of the purchase price therefor on the Remarketing
      Settlement Date. The Remarketing Agent will make payment to the Clearing
      Agency Participant of each tendering holder of Series B Preferred Stock in
      the Remarketing through the facilities of the Clearing Agency by the close
      of business on the Remarketing Settlement Date. In accordance with the
      Clearing Agency's normal procedures, on the Remarketing Settlement Date,
      the transaction described above with respect to each share of Series B
      Preferred Stock tendered or deemed tendered for purchase and sold in the
      Remarketing will be executed through the Clearing Agency and the account
      of the Clearing Agency Participant, will be debited and credited and such
      Series B Preferred Stock delivered by book entry as necessary to effect
      purchases and sales of such shares of Series B Preferred Stock. The
      Clearing Agency is expected to make payment in accordance with its normal
      procedures.

                  If any holder selling Series B Preferred Stock in the
      Remarketing fails to deliver such Series B Preferred Stock, the Clearing
      Agency Participant of such selling holder and of any other person that was
      to have purchased Series B Preferred Stock in the Remarketing may deliver
      to any such other person a number of shares of Series B Preferred Stock
      that is less than the number of shares of Series B Preferred Stock that
      otherwise was to be purchased by such person. In such event the number of
      shares of Series B Preferred Stock to be so delivered will be determined
      by such Clearing Agency Participant and delivery of such lesser number of
      shares of Series B Preferred Stock will constitute good delivery.

                                      -15-
<PAGE>

                  The Remarketing Agent is not obligated to purchase any shares
      of Series B Preferred Stock that would otherwise remain unsold in a
      Remarketing. Neither the Corporation nor the Remarketing Agent shall be
      obligated in any case to provide funds to make payment upon tender of
      shares of Series B Preferred Stock for Remarketing.

            (c) Non-Cumulative Dividends. Dividends on shares of Series B
      Preferred Stock shall be non-cumulative. To the extent that any dividends
      payable on the shares of Series B Preferred Stock on any Dividend Payment
      Date are not declared and paid, in full or otherwise, on such Dividend
      Payment Date, then such unpaid dividends shall not cumulate and shall
      cease to accrue and be payable and the Corporation shall have no
      obligation to pay dividends accrued for such Dividend Period after the
      Dividend Payment Date for such Dividend Period or to pay interest with
      respect to such dividends, whether or not dividends are declared on Series
      B Preferred Stock for any subsequent Dividend Period.

            (d) Priority of Dividends.

            (i) JUNIOR STOCK. So long as any share of Series B Preferred Stock
      remains outstanding, during a Dividend Period no dividend whatsoever shall
      be paid or declared and no distribution shall be made on any Junior Stock,
      other than a dividend payable solely in Junior Stock, and no shares of
      Junior Stock shall be purchased, redeemed or otherwise acquired for
      consideration by the Corporation, directly or indirectly (other than as a
      result of a reclassification of Junior Stock for or into Junior Stock, or
      the exchange or conversion of one share of Junior Stock for or into
      another share of Junior Stock, and other than through the use of the
      proceeds of a substantially contemporaneous sale of other shares of Junior
      Stock), unless the full dividends for such Dividend Period on all
      outstanding shares of Series B Preferred Stock have been paid or declared
      and a sum sufficient for the payment thereof set aside. Subject to this
      Section 4(d)(i), but not otherwise, such dividends (payable in cash, stock
      or otherwise), as may be determined by the Board of Directors may be
      declared and paid on any Junior Stock from time to time out of any funds
      legally available therefor, and the shares of Series B Preferred Stock
      shall not be entitled to participate in any such dividend.

            (ii) PARITY STOCK. When dividends for any Dividend Payment Date are
      not paid in full upon the shares of Series B Preferred Stock for any
      reason other than the restrictions on payment of dividends set forth in
      Section 5, and not paid in full upon any Parity Stock, all dividends
      declared upon shares of Series B Preferred Stock and all Parity Stock for
      such Dividend Payment Date shall be declared pro rata so that the
      respective amounts of such dividends shall bear the same ratio to each
      other as all dividends per share on the shares of Series B Preferred Stock
      and all such Parity Stock otherwise payable on such Dividend Payment Date
      (subject to their having been declared by the Board of Directors out of
      legally available funds and including, in the case of any Parity Stock
      that bears

                                      -16-
<PAGE>

      cumulative dividends, all accrued but unpaid dividends) bear to each
      other. When dividends for any Dividend Payment Date are not paid in full
      upon the shares of Series B Preferred Stock because of the restriction on
      payment of dividends set forth in Section 5 and not paid in full upon any
      Parity Stock that includes a restriction on dividends substantially
      similar to the restriction in Section 5, then all dividends declared upon
      shares of Series B Preferred Stock and such Parity Stock for such Dividend
      Payment Date shall be declared pro rata so that the respective amounts of
      such dividends shall bear the same ratio to each other as all dividends
      per share on the shares of Series B Preferred Stock and all such other
      Parity Stock otherwise payable on such Dividend Payment Date (subject to
      their having been declared by the Board of Directors out of legally
      available funds and including, in the case of any such other Parity Stock
      that bears cumulative dividends, all accrued but unpaid dividends) bear to
      each other.

            (e) Dividend Payment Dates for Other Preferred Stock. For so long as
      any shares of Series B Preferred Stock are outstanding, the Corporation
      shall not issue any shares of Preferred Stock having dividend payment
      dates other than the Dividend Payment Dates for the Series B Preferred
      Stock.

            SECTION 5. Restrictions on Declaration and Payment of Dividends.

            (a) Tests for Suspension. Notwithstanding Section 4(a), neither the
      Board of Directors nor any committee of the Board of Directors may declare
      dividends on the Series B Preferred Stock for payment on any Dividend
      Payment Date in an aggregate amount exceeding the New Common Equity Amount
      as of the date of declaration (the "Dividend Declaration Date") for such
      Dividend Payment Date if:

                  (i) the Covered Insurance Subsidiaries' Most Recent Weighted
            Average NAIC RBC Ratio was less than 175% (subject to Section
            5(d)(iii)); or

                  (ii) (x) the Trailing Four Quarters Consolidated Net Income
            for the period ending on the Preliminary Quarter End Test Date for
            such Dividend Payment Date is zero or a negative amount and (y) the
            Adjusted Shareholders' Equity Amount as of each of the Preliminary
            Quarter End Test Date and the Final Quarter End Test Date for such
            Dividend Payment Date has declined by 10% or more as compared to the
            Adjusted Shareholders' Equity Amount as of the tenth Quarter End
            prior to such Final Quarter End Test Date (such date for such
            Dividend Payment Date and related Final Quarter End Test Date, the
            "Benchmark Quarter End Test Date").

                  Additionally, and without limiting the foregoing provisions of
      this Section 5(a), if the Corporation has failed the test in Section
      5(a)(ii) as to a prior

                                      -17-
<PAGE>

      Dividend Payment Date, then neither the Board of Directors nor any
      committee of the Board of Directors may declare dividends on the Series B
      Preferred Stock for payment thereafter in an aggregate amount exceeding
      the New Common Equity Amount as of the Dividend Declaration Date for a
      Dividend Payment Date until the Dividend Declaration Date for the first
      Dividend Payment Date thereafter for which, as of the related Final
      Quarter End Test Date, the Adjusted Shareholders' Equity Amount has
      increased or has declined by less than 10%, in either case as compared to
      the Adjusted Shareholders' Equity Amount as of the Benchmark Quarter End
      Test Date for such prior Dividend Payment Date.

            (b) Potential Dividend Suspension Notice. If as of the Preliminary
      Quarter End Test Date for any Dividend Payment Date (x) the Trailing Four
      Quarters Consolidated Net Income for the period ending on such Preliminary
      Quarter End Test Date is zero or a negative amount and (y) the Adjusted
      Shareholders' Equity Amount as of such Preliminary Quarter End Test Date
      has declined by 10% or more as compared to the Adjusted Shareholders'
      Equity Amount as of the date that is eight quarters prior to such
      Preliminary Quarter End Test Date, then the Corporation shall give notice
      of such circumstance by first class mail, postage prepaid, addressed to
      the holders of record of the shares of Series B Preferred Stock at their
      respective last addresses appearing on the books of the Corporation, and
      shall file a copy of such notice on Form 8-K with the Commission (or, if
      the Corporation is not then a reporting company under the Securities
      Exchange Act, post a copy of such notice on the Corporation's website), by
      not later than the first Dividend Payment Date following such Preliminary
      Quarter End Test Date. Such notice shall (i) set forth the Trailing Four
      Quarters Consolidated Net Income for the period ending on such Preliminary
      Quarter End Test Date and the Adjusted Shareholders' Equity Amount as of
      such Preliminary Quarter End Test Date and as of the date that is eight
      quarters prior to such Preliminary Quarter End Test Date, and (ii) state
      that the Corporation may be limited by the terms of the Series B Preferred
      Stock from declaring and paying dividends on such Dividend Payment Date
      unless the Corporation, through the generation of earnings or issuance of
      new Common Stock, increases its Adjusted Shareholders' Equity Amount by an
      amount specified in such notice by the second Quarter End after the date
      of such notice. The Corporation need not give any notice under this
      Section 5(b) during any period in which the Corporation's ability to
      declare and pay dividends is limited by reason of the application of
      Section 5(a).

            (c) Dividend Suspension Notice. By not later than the 15th day prior
      to each Dividend Payment Date for which dividends are being suspended by
      reason of either of the tests set forth in Section 5(a), and the
      Corporation is not otherwise able to pay dividends on the Series B
      Preferred Stock out of the New Common Equity Amount, the Corporation shall
      give notice of such suspension by first class mail, postage prepaid,
      addressed to the holders of record of the shares of Series B Preferred
      Stock at their respective last addresses appearing on the

                                      -18-
<PAGE>

      books of the Corporation, and shall file a copy of such notice on Form 8-K
      with the Commission (or, if the Corporation is not then a reporting
      company under the Securities Exchange Act, post a copy of such notice on
      the Corporation's website). Such notice, in addition to stating that
      dividends will be suspended, shall (i) if dividends are suspended by
      reason of the test set forth in Section 5(a)(i), set forth the fact that
      the Covered Insurance Subsidiaries' Most Recent Weighted Average NAIC RBC
      Ratio was less than 175% and (ii) if such suspension is by reason of the
      test set forth in Section 5(a)(ii), set forth the Adjusted Shareholders'
      Equity Amount as of the most recent Quarter End and the amount by which
      the Adjusted Shareholders' Equity Amount must increase in order for
      declaration and payment of dividends to be resumed.

            (d) Interpretive Provisions; Qualifications, Etc. In order to give
      effect to the foregoing, the following provisions apply:

                  (i) Neither the Board of Directors nor a committee of the
            Board of Directors may declare dividends on the Series B Preferred
            Stock for payment on any Dividend Declaration Date (x) that is more
            than 60 days prior to the related Dividend Payment Date or (y) that
            is earlier than the date on which the Corporation's financial
            statements for the most recently completed quarter prior to the
            related Dividend Payment Date have been filed or furnished to the
            Commission on Form 10-K, Form 10-Q or Form 8-K; provided, however,
            if the Board of Directors determines to delay filing the
            Corporation's financial statements as of and for the period ended on
            a Final Quarter End Test Date with the Commission to a date later
            than the date on which "accelerated filers" within the meaning of
            Rule 12b-2 under the Securities Exchange Act are required to file
            such financial statements, whether because of concerns over accuracy
            of such financial statements or their compliance with U.S. GAAP or
            otherwise, then the Board of Directors or a committee of the Board
            of Directors may determine whether the Corporation is permitted
            under Section 5(a) to declare dividends on the Series B Preferred
            Stock based upon the Corporation's financial statements most
            recently filed with, or furnished to the Commission.

                  (ii) Except as expressly provided otherwise in this Section 5,
            all references in this Section 5 to financial statements of the
            Corporation shall be deemed to be to financial statements prepared
            in accordance with U.S. GAAP, consistently applied, and, for so long
            as the Corporation is a reporting company under the Securities
            Exchange Act, filed by the Corporation with, or furnished by it to,
            the Commission under the Securities Exchange Act. If at any relevant
            time or for any relevant period the Corporation is not a reporting
            company under the Securities Exchange Act, then (x) for all relevant
            dates and periods the Corporation shall prepare and post on its
            website the financial statements that it would have

                                      -19-
<PAGE>

            been required to file with the Commission had it continued to be a
            reporting company under the Securities Exchange Act, in each case on
            or before the dates that the Corporation would have been required to
            file such financial statements with the Commission under the
            Securities Exchange Act had it continued to be an "accelerated
            filer" within the meaning of Rule 12b-2 under the Securities
            Exchange Act, and (y) the provisions of this Section 5 shall be read
            mutatis mutandis to give effect to such provision.

                  (iii) The limitation on dividends provided for in Section
            5(a)(i) shall be of no force and effect if, as of a Dividend
            Declaration Date, the combined total assets of the Insurance
            Subsidiaries do not account for 25% or more of the consolidated
            total assets of the Corporation as reflected on its most recent
            consolidated financial statements.

                  (iv) All financial terms used in this Section 5 that are not
            specifically defined, including within the definitions of defined
            terms, shall be determined in accordance with U.S. GAAP as applied
            to and reflected in the related financial statements of the
            Corporation as of the relevant dates and for the relevant period,
            except as provided in the next sentence. If because of a change in
            U.S. GAAP that results in a periodic charge, a cumulative adjustment
            or a restatement:

                  (x) the Corporation's Consolidated Net Income Amount for the
            quarter in which such change takes effect is higher or lower than it
            would have been absent such change by the greater of $25 million or
            5%, and the Trailing Four Quarters Consolidated Net Income is higher
            or lower than it would have been absent such change, then, for
            purposes of the calculations described under Section 5(a)(ii),
            commencing with the fiscal quarter for which such changes in U.S.
            GAAP becomes effective and ending with the third quarter thereafter,
            such Trailing Four Quarters Consolidated Net Income shall be
            calculated on a pro forma basis without giving effect to such change
            in U.S. GAAP; or

                  (y) the Adjusted Shareholders' Equity Amount as of the Quarter
            End in which such change takes effect is higher or lower than it
            would have been absent such change by the greater of $65 million or
            1%, then, for purposes of the calculations described under Section
            5(a)(ii) and the last sentence of Section 5(a), and for so long as
            such calculations with respect to such quarter are required to be
            performed, the Adjusted Shareholders' Equity Amount shall be
            calculated on a pro forma without giving effect to such change in
            U.S. GAAP.

            (e) Definitions. The following terms have the meanings indicated:

                                      -20-
<PAGE>

            "Adjusted Shareholders' Equity Amount" means, as of any Quarter End,
the shareholders' equity of the Corporation as reflected on its consolidated
balance sheet as of such Quarter End excluding accumulated other comprehensive
income and loss as reflected on such consolidated balance sheet, (i) subject to
Section 5(d)(iv) and (ii) except that any increase in shareholders' equity
resulting from the issuance of preferred stock (other than the Series A
Preferred Stock and the Series B Preferred Stock ) during the period from and
including the Final Quarter End Test Date for a Dividend Period as to which the
Corporation fails the test set forth in Section 5(a)(ii) through the first
Quarter End thereafter as of which the Adjusted Shareholders' Equity Amount has
declined by less than 10% or increased as compared to such amount on the
Benchmark Quarter End Test Date shall not be taken into account in calculating
the Adjusted Shareholders' Equity Amount as of such Quarter End during such
period.

            "Annual Statement" means, as to an Insurance Subsidiary, the annual
statement of such Insurance Subsidiary containing its statutory balance sheet
and income statement as required to be filed by it with one or more state
insurance commissioners or other state insurance regulatory authorities.

            "Benchmark Quarter End Test Date" has the meaning specified in
Section 5(a)(ii).

            "Commission" means the Securities and Exchange Commission.

            "Company Action Level RBC" has the meaning specified in subsection J
of Section 1 (or the relevant successor section, if any) of the Model Act.

            "Consolidated Net Income Amount" means, for any fiscal quarter of
the Corporation, its consolidated net income as reflected on its consolidated
statement of operations for such fiscal quarter, subject to Section 5(d)(iv).

            "Covered Insurance Subsidiaries" means, as of any Year End,
Insurance Subsidiaries that account for 80% or more of the combined General
Account Admitted Assets of the Corporation's Insurance Subsidiaries as of such
Year End. The Corporation's Insurance Subsidiaries as of a Year End shall be
identified by first ranking the Insurance Subsidiaries from largest to smallest
based upon the amount of each Insurance Subsidiary's General Account Admitted
Assets and then, beginning with the Insurance Subsidiary that has the largest
amount of General Account Admitted Assets as of such Year End, identifying such
Insurance Subsidiaries as Covered Insurance Subsidiaries until the ratio of the
combined General Account Admitted Assets of the Insurance Subsidiaries so
identified to the combined General Account Admitted Assets of all of the
Insurance Subsidiaries as of such Year End equals or exceeds 80%.

            "Covered Insurance Subsidiaries' Most Recent Weighted Average NAIC
RBC Ratio" means, as of any date, an amount (expressed as a percentage)
calculated as:

                                      -21-
<PAGE>

            (x) the sum of the Total Adjusted Capital of each of the Covered
      Insurance Subsidiaries shown on such Covered Insurance Subsidiary's most
      recently filed Annual Statement, divided by

            (y) the sum of the Company Action Level RBC of each of the Covered
      Insurance Subsidiaries as shown on such Covered Insurance Subsidiary's
      most recently filed Annual Statement.

            "Dividend Declaration Date" has the meaning specified in Section
5(a).

            "Final Quarter End Test Date" and "Preliminary Quarter End Test
Date" mean, with respect to a Dividend Payment Date in the relevant month
indicated under "Dividend Payment Date" in the table set forth below, the
related date indicated under "Final Quarter End Test Date" or "Preliminary
Quarter End Test Date" (as applicable) in such table:

<TABLE>
<CAPTION>
                                           Preliminary                               Final
   Dividend Payment Date              Quarter End Test Date                   Quarter End Test Date
   ---------------------              ---------------------                   ---------------------
<S>                          <C>                                      <C>
In March                     The June 30 preceding such Dividend      The December 31 preceding such
                             Payment Date                             Dividend Payment Date

In June                      The September 30 preceding such          The March 31 preceding such
                             Dividend Payment Date                    Dividend Payment Date

In September                 The December 31 preceding such           The June 30 preceding such Dividend
                             Dividend Payment Date                    Payment Date

In December                  The March 31 preceding such Dividend     The September 30 preceding such
                             Payment Date                             Dividend Payment Date
</TABLE>

            "General Account Admitted Assets" means, as to an Insurance
Subsidiary as of any Year End, the total admitted assets of such Insurance
Subsidiary as reflected on the balance sheet included in its statutory financial
statements as of such Year End minus the separate account assets reflected on
such balance sheet.

            "Insurance Subsidiary" means a subsidiary of the Corporation that is
organized under the laws of any state in the United States and is licensed as a
life insurance company in any state in the United States but does not include
any subsidiary of an Insurance Subsidiary.

            "Model Act" means the Risk-Based Capital (RBC) for Insurers Model
Act as prepared by the NAIC and included in its Model Laws, Regulations and
Guidelines as of June 14, 2005 and as hereafter amended, modified or
supplemented.

                                      -22-
<PAGE>

            "NAIC" means the National Association of Insurance Commissioners.

            "New Common Equity Amount" means, at any date, the net proceeds
(after underwriters' or placement agents' fees, commissions or discounts and
other expenses relating to the issuances) received by the Corporation from new
issuances of its Common Stock (whether in one or more public offerings
registered under the Securities Act or private placements or other transactions
exempt from registration under the Securities Act) during the period commencing
on the 90th day prior to such date, and which are designated by the Board of
Directors at or before the time of issuance as available to pay dividends on the
Series B Preferred Stock.

            "Quarter End" means the last day of each fiscal quarter of the
Corporation (i.e., March 31, June 30, September 30 and December 31).

            "Securities Act" means the Securities Act of 1933, as amended.

            "Total Adjusted Capital" has the meaning specified in subsection M
of Section 1 (or the relevant successor section, if any) of the Model Act.

            "Trailing Four Quarters Consolidated Net Income" means, for any
period ending on a Quarter End, the sum of the Consolidated Net Income Amounts
for the Corporation's four fiscal quarters ending on such Quarter End, with
losses being treated as negative numbers for such purpose.

            "U.S. GAAP" means, at any date or for any period, U.S. generally
accepted accounting principles as in effect on such date or for such period.

            "Year End" means the last day of each fiscal year of the
Corporation.

            SECTION 6. Liquidation Rights.

            (a) Liquidation. In the event of any voluntary or involuntary
      liquidation, dissolution or winding up of the affairs of the Corporation,
      holders of Series B Preferred Stock shall be entitled, before any
      distribution or payment out of the assets of the Corporation may be made
      to or set aside for the holders of any Junior Stock, to receive in full an
      amount equal to $25 per share (the "Liquidation Preference"), together
      with an amount equal to all accrued and unpaid dividends for the
      then-current Dividend Period to the date of payment.

            (b) Partial Payment. If the assets of the Corporation are not
      sufficient to pay the Liquidation Preference in full to all holders of
      Series B Preferred Stock and all holders of any Parity Stock, the amounts
      paid to the holders of Series B Preferred Stock and to the holders of all
      Parity Stock shall be paid pro rata in

                                      -23-
<PAGE>

      accordance with the respective aggregate liquidation preferences of Series
      B Preferred Stock and all such Parity Stock.

            (c) Residual Distributions. If the Liquidation Preference has been
      paid in full to all holders of Series B Preferred Stock and the
      liquidation preference of any Parity Stock has been paid in full to all
      holders of such Parity Stock, the holders of Junior Stock shall be
      entitled to receive all remaining assets of the Corporation according to
      their respective rights and preferences.

            (d) Merger, Consolidation and Sale of Assets Not Liquidation. For
      purposes of this Section 6, the merger or consolidation of the Corporation
      with any other corporation, including a merger in which the holders of
      Series B Preferred Stock receive cash or property for their shares, or the
      sale of all or substantially all of the assets of the Corporation, shall
      not constitute a liquidation, dissolution or winding up of the affairs of
      the Corporation.

            SECTION 7. Redemption.

            (a) Redemption. So long as the full dividends on all outstanding
      shares of Series B Preferred Stock for the then-current Dividend Period
      have been paid or declared and a sum sufficient for the payment thereof
      set aside, the Corporation, at the option of its Board of Directors, may,
      upon notice given as provided in Section 7(b), redeem the shares of Series
      B Preferred Stock at the time outstanding in whole or, subject to the next
      succeeding sentence, in part (i) on any Dividend Payment Date during the
      Initial Fixed Rate Period beginning on or after the Dividend Payment Date
      in June 2015, (ii) on such dates with respect to any other Fixed Rate
      Period as the Corporation may determine prior to the commencement of such
      Fixed Rate Period or (iii) at any time during a Floating Rate Period. A
      redemption of shares of Series B Preferred Stock in part may be made
      pursuant to the foregoing sentence only if, after giving effect to such
      redemption, not less than 2,000,000 shares of Series B Preferred Stock
      will remain outstanding. Any such redemption shall be at the redemption
      price of $25 per share, together, in each case, with accrued and unpaid
      dividends for the then-current Dividend Period to the redemption date.

            (b) Notice of Redemption. Notice of every redemption of shares of
      Series B Preferred Stock shall be mailed by first class mail, postage
      prepaid, addressed to the holders of record of the shares to be redeemed
      at their respective last addresses appearing on the books of the
      Corporation. Such mailing shall be at least 30 days and not more than 60
      days before the date fixed for redemption. Any notice mailed as provided
      in this Subsection shall be conclusively presumed to have been duly given,
      whether or not the holder receives such notice, but failure duly to give
      such notice by mail, or any defect in such notice or in the mailing
      thereof, to any holder of shares of Series B Preferred Stock designated
      for redemption shall not affect the validity of the proceedings for the
      redemption of

                                      -24-
<PAGE>

      any other shares of Series B Preferred Stock. Each notice shall state (i)
      the redemption date; (ii) the number of shares of Series B Preferred Stock
      to be redeemed; (iii) the redemption price; (iv) the place or places where
      the shares of Series B Preferred Stock are to be redeemed; and (v) that
      dividends on the shares of Series B Preferred Stock to be redeemed will
      cease to accrue on the redemption date.

            (c) Partial Redemption. In case of any redemption of only part of
      the shares of Series B Preferred Stock at the time outstanding, the shares
      to be redeemed shall be selected either pro rata or by lot or in such
      other manner as the Board of Directors may determine to be fair and
      equitable. Subject to the provisions hereof, the Board of Directors shall
      have full power and authority to prescribe the terms and conditions upon
      which shares of Series B Preferred Stock shall be redeemed from time to
      time.

            (d) Effectiveness of Redemption. If notice of redemption has been
      duly given and if on or before the redemption date specified in the notice
      all funds necessary for the redemption have been set aside by the
      Corporation, separate and apart from its other funds, in trust for the pro
      rata benefit of the holders of the shares called for redemption, so as to
      be and continue to be available therefor, then, notwithstanding that any
      certificate for any share so called for redemption has not been
      surrendered for cancellation, on and after the redemption date all shares
      so called for redemption shall cease to be outstanding and all rights with
      respect to such shares shall forthwith on such redemption date cease and
      terminate, except only the right of the holders thereof to receive the
      amount payable on such redemption without interest. Any funds unclaimed at
      the end of three years from the redemption date shall, to the extent
      permitted by law, be released to the Corporation, after which time the
      holders of the shares so called for redemption shall look only to the
      Corporation for payment of the redemption price of such shares.

            SECTION 8. Voting Rights.

            (a) General. The holders of Series B Preferred Stock shall not have
      any voting rights except as set forth in this Section 8 or as otherwise
      required by law.

            (b) Right to Elect Two Directors Upon Non-Payment of Dividends. If
      and whenever dividends on Series B Preferred Stock and any other class or
      series of stock of the Corporation ranking on a parity with Series B
      Preferred Stock as to payment of dividends (any such class or series being
      herein referred to as "Dividend Parity Stock") have not been paid in an
      aggregate amount, as to any such class or series, equal to at least six
      quarterly dividends (whether or not consecutive), the number of directors
      then constituting the Board of Directors shall be increased by two and the
      holders of Series B Preferred Stock, together

                                      -25-
<PAGE>

      with the holders of all other affected classes and series of Dividend
      Parity Stock similarly entitled to vote for the election of a total of two
      additional directors, voting separately as a single class, shall be
      entitled to elect the two additional members of the Corporation's
      directors at any annual meeting of stockholders or any special meeting of
      the holders of Series B Preferred Stock and such Dividend Parity Stock for
      which dividends have not been paid, called as hereinafter provided,
      provided that the election of any such directors shall not cause the
      Corporation to violate the corporate governance requirement of the New
      York Stock Exchange (or any other exchange on which its securities may be
      listed) that listed companies must have a majority of independent
      directors. Whenever full dividends have been paid regularly on the Series
      B Preferred Stock and Dividend Parity Stock then outstanding, if any, for
      at least one year, then the right of the holders of Series B Preferred
      Stock and such Dividend Parity Stock to elect such additional two
      directors shall cease (but subject always to the same provisions for the
      vesting of such voting rights in the case of any similar non-payment of
      dividends in respect of future Dividend Periods), and the terms of office
      of all persons elected as directors by the holders of Series B Preferred
      Stock and such Dividend Parity Stock for which dividends have not been
      paid shall forthwith terminate and the number of directors constituting
      the Board of Directors shall be reduced accordingly. At any time after
      such voting power shall have been so vested in the holders of Series B
      Preferred Stock and such Dividend Parity Stock, the Secretary of the
      Corporation may, and upon the written request of any holder of shares of
      Series B Preferred Stock (addressed to the Secretary at the principal
      office of the Corporation) shall, call a special meeting of the holders of
      shares of Series B Preferred Stock and such Dividend Parity Stock for
      which dividends have not been paid for the election of the two directors
      to be elected by them as herein provided, such call to be made by notice
      similar to that provided in the by-laws for a special meeting of the
      stockholders or as required by law. If any such special meeting so
      required to be called shall not be called by the Secretary within 20 days
      after receipt of any such request, then any holder of shares of Series B
      Preferred Stock may (at the Corporation's expense) call such meeting, upon
      notice as herein provided, and for that purpose shall have access to the
      stock books of the Corporation. The directors elected at any such special
      meeting shall hold office until the next annual meeting of the
      stockholders if such office shall not have previously terminated as above
      provided. In case any vacancy shall occur among the directors elected by
      the holders of Series B Preferred Stock and such Dividend Parity Stock for
      which dividends have not been paid, a successor shall be elected by the
      Board of Directors to serve until the next annual meeting of the
      stockholders upon the nomination of the then remaining director elected by
      the holders of Series B Preferred Stock and such Dividend Parity Stock for
      which dividends have not been paid or the successor of such remaining
      director.

            (c) Other Voting Rights. So long as any shares of Series B Preferred
      Stock are outstanding, in addition to any other vote or consent of
      stockholders required by law or by the amended and restated certificate of
      incorporation, the

                                      -26-
<PAGE>

      vote or consent of the holders of at least 66 2/3% of the shares of Series
      B Preferred Stock at the time outstanding, voting separately as a single
      class, given in person or by proxy, either in writing without a meeting or
      by vote at any meeting called for the purpose, shall be necessary for
      effecting or validating:

                  (i) any amendment, alteration or repeal of any provision of
            the amended and restated certificate of incorporation or by-laws of
            the Corporation that would alter or change the voting powers,
            preferences or special rights of the Series B Preferred Stock so as
            to affect them adversely; provided, however, that the amendment of
            the amended and restated certificate of incorporation so as to
            authorize or create, or to increase the authorized amount of, any
            Junior Stock or any shares of any class or series or any securities
            convertible into shares of any class or series of Parity Stock shall
            not be deemed to affect adversely the voting powers, preferences or
            special rights of the Series B Preferred Stock;

                  (ii) any amendment or alteration of the amended and restated
            certificate of incorporation of the Corporation to authorize or
            create, or increase the authorized amount of, any shares of any
            class or series or any securities convertible into shares of any
            class or series of capital stock of the Corporation ranking prior to
            Series B Preferred Stock in the payment of dividends or in the
            distribution of assets on any liquidation, dissolution or winding up
            of the Corporation; or

                  (iii) consummation of a binding share exchange or
            reclassification involving the Series B Preferred Stock or a merger
            or consolidation of the Corporation with another entity, unless in
            each case (i) the Series B Preferred Stock remain outstanding or, in
            the case of any such merger or consolidation with respect to which
            the Corporation is not the surviving or resulting entity, are
            converted into or exchanged for preference securities of the
            surviving or resulting entity or its ultimate parent, and (ii) such
            Series B Preferred Stock remaining outstanding or such preference
            securities, as the case may be, have such rights, preferences,
            privileges and voting powers, taken as a whole, as are not
            materially less favorable to the holders thereof than the rights,
            preferences, privileges and voting powers of the Series B Preferred
            Stock, taken as a whole;

provided, however, that any increase in the amount of the authorized or issued
Series B Preferred Stock or authorized preferred stock or the creation and
issuance, or an increase in the authorized or issued amount, of other Parity
Stock and/or Junior Stock (whether such stock bears dividends on a cumulative or
non-cumulative basis) will not be deemed to adversely affect the special rights,
preferences, privileges or voting powers of the Series B Preferred Stock.

                                      -27-
<PAGE>

            If an amendment, alteration, repeal, share exchange,
reclassification, merger or consolidation described above would adversely affect
one or more but not all series of voting preferred stock (including the Series B
Preferred Stock for this purpose), then only the series affected and entitled to
vote shall vote as a class in lieu of all such series of preferred stock.

            Without the consent of the holders of the Series B Preferred Stock,
so long as such action does not adversely affect the special rights,
preferences, privileges and voting powers of the Series B Preferred Stock, taken
as a whole, the Corporation may amend, alter, supplement or repeal any terms of
the Series B Preferred Stock:

      (x) to cure any ambiguity, or to cure, correct or supplement any provision
      contained in the certificate of designations for the Series B Preferred
      Stock that may be defective or inconsistent; or

      (y) to make any provision with respect to matters or questions arising
      with respect to the Series B Preferred Stock that is not inconsistent with
      the provisions of the certificate of designations.

            The foregoing voting provisions will not apply if, at or prior to
the time when the act with respect to which such vote would otherwise be
required shall be effected, all outstanding Series B Preferred Stock shall have
been redeemed or called for redemption upon proper notice and sufficient funds
shall have been set aside by the Corporation for the benefit of the holders of
Series B Preferred Stock to effect such redemption.

            SECTION 9. Other Rights. The shares of Series B Preferred Stock
shall not have any voting powers, preferences or relative, participating,
optional or other special rights, or qualifications, limitations or restrictions
thereof, other than as set forth herein or in the amended and restated
certificate of incorporation of the Corporation.

            SECTION 10. Restatement of Certificate. Upon any restatement of the
amended and restated certificate of incorporation of the Corporation, Sections 1
through 9 of this certificate of designations shall be included in Article 2 of
the amended and restated certificate of incorporation under the heading "Series
B Non-Cumulative Perpetual Preferred Stock" and this Section 10 may be omitted.
If the Board of Directors so determines, the numbering of Sections 1 through 9
may be changed for convenience of reference or for any other proper purpose."

                                      -28-
<PAGE>

            IN WITNESS WHEREOF, Principal Financial Group, Inc. has caused this
certificate to be executed by the undersigned on this 16th day of June, 2005.

                                PRINCIPAL FINANCIAL GROUP, INC.

                                By  /s/ C.L. Bassett
                                    --------------------------------------------
                                    Name:  C.L. Bassett
                                    Title: Vice President and Treasurer

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

                                      -29-<PAGE>

                                                                     Exhibit 4.3

NUMBER:                                                    ______________ SHARES
                                                       PAR VALUE $0.01 PER SHARE

                                                          CUSIP NO.: 74251V 20 1
                                                              ISIN: US74251V2016

                          [Form of Face of Certificate]

                         PRINCIPAL FINANCIAL GROUP, INC.

              Incorporated Under the Laws of the State of Delaware

               SERIES A NON-CUMULATIVE PERPETUAL PREFERRED SHARES

      This is to certify that ____________________ is the owner of ______ fully
paid and non-assessable shares of Series A Non-Cumulative Perpetual Preferred
Stock, $0.01 par value and a liquidation preference of $100 per share of
Principal Financial Group, Inc. (the "Corporation"), transferable on the books
of the Corporation by the holder hereof, in person or by duly authorized
attorney, upon surrender of this Certificate properly endorsed. This Certificate
is not valid until countersigned and registered by the transfer agent and
registrar.
<PAGE>
      IN WITNESS WHEREOF, the Company has executed this Series A Preferred Share
Certificate as of the date set forth below.

                                        PRINCIPAL FINANCIAL GROUP, INC.

                                        By: _____________________________
                                        Name:
                                        Title:

                                        By: _____________________________
                                        Name:
                                        Title:

                                        Dated:  June       , 2005

COUNTERSIGNED AND REGISTERED

as Transfer Agent,

By:_____________________________
Authorized Signatory

Dated: June      , 2005

                                       2
<PAGE>
                            [Reverse of Certificate]

                         PRINCIPAL FINANCIAL GROUP, INC.

               SERIES A NON-CUMULATIVE PERPETUAL PREFERRED SHARES

      The Corporation will furnish without charge to each stockholder who so
requests the powers, designations, preferences and relative participating,
optional or other special rights of the Series A Non-Cumulative Perpetual
Preferred Stock of the Corporation represented by this Certificate and the
qualifications, limitations or restrictions of such preferences and/or rights.
Such request should be addressed to the Corporation or the Transfer Agent.

      The following abbreviations, when used in the inscription of the face of
this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

      TEN COM      -as tenants in common

      TEN ENT      -as tenants by the entireties

      JT TEN       -as joint tenants with right of survivorship and not as
                    tenants in common

      UNIF GIFT MIN ACT
                          ----------------------------
                                 (Cust) (Minor)

                         Custodian under Uniform Gifts to Minors Act

                         ------------------------------
                                     (State)

    Additional abbreviations may also be used though not in the above list.

                                   ASSIGNMENT

         FOR VALUE RECEIVED, the undersigned assigns and transfers shares of
Series A Non-Cumulative Perpetual Preferred Stock of the Corporation evidenced
hereby to:

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

(Insert assignee's social security or tax identification number)

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

(Insert address and zip code of assignee)

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

and irrevocably appoints:

--------------------------------------------------------------------------------

agent to transfer the shares of Series A Non-Cumulative Perpetual Preferred
Stock of the Corporation evidenced hereby on the books of the transfer agent and
registrar. The agent may substitute another to act for him or her.

Date: _______________________________

Signature: ___________________________

(Sign exactly as your name appears on the other side of this Certificate)

Signature Guarantee: ___________________________

----------------

* Signature must be guaranteed by an "eligible guarantor institution" (i.e., a
bank, stockbroker, savings and loan association or credit union) meeting the
requirements of the transfer agent and registrar, which requirements include
membership or participation in the Securities Transfer Agents Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
the transfer agent and registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.

                                       3

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