Business & Finance
Thu, September 6, 2012 
OLDWICK, N.J.--([ BUSINESS WIRE ])--A.M. Best Co. has assigned debt ratings of aa-a to the newly issued senior unsecured notes of Principal Financial Group, Inc. (PFG) (headquartered in Des Moines, IA)(NYSE: PFG). The securities will be issued in two tranches: $300 million 3.30% senior unsecured notes due 2022 and $300 million 4.625% senior unsecured notes due 2042. The outlook assigned to both ratings is stable. PFGas existing issuer credit and debt ratings are unchanged.
Proceeds from the issuances will be used for general corporate purposes, which could include repayment of $400 million aggregate principal amount of the 7.875% senior unsecured notes due May 2014, acquisitions or to support organic growth. PFGas overall financial leverage is expected to remain below 20%, while interest coverage should remain close to eight times earnings, driven by the companyas strong operating earnings profile.
Both ratios are well within A.M. Bestas guidelines for its current rating level. The ratings reflect PFGas diverse revenue stream and improved performance within its investment portfolio. The ratings also reflect PFGas dominant position in the U.S. defined contribution plan market, its broad distribution, continued global growth and significant cash holdings at PFG. While the organization continues to report favorable earnings, A.M. Best remains concerned regarding the future impact of a continued low interest rate environment on PFGas spread-based product lines. Consistent with its peers, A.M. Best will be monitoring the performance of PFGas spread-based products should the challenging operating environment continue for an extended period of time.
The methodology used in determining these ratings is Bestas Credit Rating Methodology, which provides a comprehensive explanation of A.M. Bestas rating process and contains the different rating criteria employed in the rating process. Bestas Credit Rating Methodology can be found at [ www.ambest.com/ratings/methodology ].
Founded in 1899, A.M. Best Company is the worldas oldest and most authoritative insurance rating and information source. For more information, visit [ www.ambest.com ].
Copyright 2012 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.
