AM Best Affirms Credit Ratings of Principal Financial Group, Inc. and Its Subsidiaries

AM Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of “aa” (Superior) of Principal Life Insurance Company and Principal National Life Insurance Company. Both are life insurance operating companies of Principal Financial Group, Inc. (PFG) [NASDAQ: PFG] and collectively referred to as Principal. Concurrently, AM Best has affirmed the Long-Term ICRs of “a” (Excellent) of Principal Financial Services, Inc. and PFG, as well as the group’s Long-Term Issue Credit Ratings (Long-Term IRs). In addition, AM Best also has affirmed the group’s Short-Term Issue Credit Rating (Short-Term IR). The outlook of these Credit Ratings (ratings) is stable. (Please see below for a detailed listing of the Long- and Short-Term IRs.) All companies are headquartered in Des Moines, IA.

The ratings reflect Principal’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, favorable business profile and very strong enterprise risk management.

AM Best views Principal’s risk-adjusted capitalization as strong, as measured by Best’s Capital Adequacy Ratio (BCAR), although capital growth has been limited by dividends to the parent company. The company lowered its product risk with reinsurance in 2022, ceding its in-force retail fixed annuity and universal life insurance with secondary guarantee (ULSG) blocks. The balance sheet strength assessment also benefits from historically favorable financial flexibility, liquidity profiles and significant excess capital and access to capital markets at the holding company level. AM Best’s favorable view of the company’s capital is somewhat offset by Principal’s higher allocations to commercial mortgages in comparison with the group’s peers and usage of its captive reinsurers.

The company has consistently reported favorable profitability metrics, benefiting from its diverse lines of business, distribution channels and leading market positions. An increasing presence internationally provides additional earnings diversity. However, AM Best notes that political and macroeconomic risks in Principal’s key international markets could have negative effects on the holding company going forward.

Principal has demonstrated strong risk management capabilities through continued enhancements to its risk modeling and stress-testing capabilities to support its overall business strategy, which have driven recent major business decisions.