AM Best Comments on Credit Ratings of Principal Financial Group, Inc. and Its Subsidiaries Following Acquisition Announcement

AM Best has commented that the Credit Ratings (ratings) of Principal Financial Group, Inc. [Nasdaq:PFG] (headquartered in Des Moines, IA) and its insurance subsidiaries (Principal) remain unchanged following the announcement that the company has signed a definitive agreement to acquire Wells Fargos Investment Retirement and Trust business. Under the agreement, the purchase price is $1.2 billion in cash, with up to an additional $150 million payable in two years based on revenue retention.

The transaction increases Principals U.S. retirement business assets under administration by approximately $820 billion from almost four million plan participants across retirement and non-retirement trust and custody, defined benefit and defined contribution accounts. AM Best notes that the acquired business will be held outside Principals domestic insurance operations upon transaction close with the expectation that this business will be transitioned through its domestic insurance entities over time. As a result, the immediate impact on the ratings of Principals insurance operations are modest, but support improving diversification, scale and profitability over the long-term. The transaction is expected to close in the third quarter of 2019, pending regulatory approval.

On Feb. 21, 2019, AM Best revised the outlook to positive from stable for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term ICR of aa-of Principal Life Insurance Company and Principal National Life Insurance Company. The outlook of the FSR remains stable. The ratings reflect Principals balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM). The positive outlook reflects the continued strength and evolution of the organizations ERM capabilities.

This press release relates to Credit Ratings that have been published on AM Bests website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Bests Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Bests Credit Ratings. For information on the proper media use of Bests Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Bests Credit Ratings and AM Best Rating Action Press Releases.

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Copyright 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Keith Behrmann, CFA, CAIA, ChFU, CLU
Senior Financial
Analyst

+1 908 439 2200, ext. 5733
[email protected]

Ken
Johnson, CFA, CAIA, FRM

Senior Director
+1 908
439 2200, ext. 5056

[email protected]

Christopher
Sharkey

Manager, Public Relations
+1 908 439
2200, ext. 5159

[email protected]

Jim
Peavy

Director, Public Relations
+1 908 439
2200, ext. 5644

[email protected]