Principal Financial Group Inc. announced today that its net income declined by 35 percent in the first quarter due to significant equity market declines and higher costs for employee pension and post-retirement benefits.

Net income available to common shareholders for the quarter was $112.8 million, or 43 cents per share, compared with $174.2 million, or 67 cents per share, in the year-ago period.

Profits were reduced by net realized capital losses of $50.9 million, including $66.5 million in losses related to sales and other than temporary impairment of fixed-maturity securities, which were partially offset by gains, including $29.6 million on bond sales. Total assets under management fell by 22 percent to $236.6 billion.

Operating earnings were $164 million, compared with $258.4 million a year ago, with declines in every segment of business.

The company’s three key retirement and investment products generated $6 billion of sales, and management actions reduced compensation and other expenses by $86 million, or 15 percent, in the quarter.

“Operating earnings for the quarter were solid as our expense initiatives helped to offset some of the decline in revenues caused by reduced asset valuations,” said Larry Zimpleman, president and CEO, in a release. “Our investment portfolio continued to perform well, resulting in a manageable level of capital losses. And we continued to demonstrate our ability to attract and retain customers.”

As of March 31, Principal held cash and cash equivalents of approximately $850 million, which the company said is sufficient to meet the holding company’s needs for the year, including $441 million of outstanding senior debt maturing in August. It estimates cash needs in 2010 of approximately $80 million.

Last week, Principal laid off 75 people in its Principal Global Investors division, following 550 layoffs in December.

Principal will host a conference call to discuss the results tomorrow at 9 a.m. To access a live webcast of that call, go to www.principal.com at least 10 to 15 minutes prior to the start of the call.