OLDWICK, N.J.--(BUSINESS WIRE)--
A.M. Best has assigned Long-Term Issue Credit Ratings of “a-” to the $350 million 3.10% 10-year senior unsecured notes due November 2026 and the $300 million 4.30% 30-year senior unsecured notes due November 2046 of Principal Financial Group, Inc. (Principal) (headquartered in Des Moines, IA) [NYSE PFG]. Both of these notes are fully and unconditionally guaranteed by Principal Financial Services, Inc. The outlook assigned to these Credit Ratings (ratings) is stable. All other ratings of Principal and its subsidiaries are unchanged.
A.M. Best expects the proceeds from the issuances to be used to purchase the company’s upcoming 1.850% senior notes maturing in 2017 and 8.875% senior notes maturing in 2019. Additionally, Principal may choose to tender up to an aggregate principal amount of $150 million of the outstanding 6.05% senior notes due 2036. Due to the expected usage of proceeds from the issuance, Principal’s adjusted debt-to-capital ratio, which was 23.0% as of Sept. 30, 2016, is expected to decrease to approximately 22%. In addition, A.M. Best expects interest coverage, which is approximately 11 times, to remain strong.
Principal’s ratings reflect the organization’s diversified revenue sources, consistent operating earnings, solid balance sheet and positive net flows across core business segments. The ratings also reflect Principal’s position as a leading provider of defined contribution plans, defined benefit plans, plan termination annuities and non-qualified plans in the United States. Somewhat offsetting these positive factors are its lower risk-adjusted capitalization relative to similarly rated peers, increasing exposure to country risk due to the rapid expansion of its international operations and material exposure to higher-risk assets within its investment portfolio.
This press release relates to Credit Ratings that have been published on A.M. Best’s 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
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