OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has assigned a financial strength rating (FSR) of A+ (Superior) and an issuer credit rating (ICR) of "aa-" to Principal National Life Insurance Company (PNL) (Des Moines, IA), an indirect subsidiary of Principal Financial Group, Inc. (PFG) (Des Moines, IA) (NYSE: PFG). The outlook assigned to both ratings is negative. Existing financial strength, issuer credit and debt ratings for PFG and its subsidiaries are unchanged.

PFG intends to utilize PNL to write individual fixed (term and UL) life insurance products in all states except New York. PNL's target market is consistent with that of PFG's key life/health subsidiary, Principal Life Insurance Company (PLIC), which currently has an FSR of A+ (Superior) and ICR of "aa-" (negative outlook for both ratings). PNL is expected to start offering fixed products during the third quarter of 2009, and will essentially replace PLIC as the group's main writer of new individual life policies outside of New York.

A.M. Best expects PNL to maintain adequate capital for its current ratings. To manage risk and capital, there is a coinsurance agreement between PNL and PLIC, whereby all business written by PNL will automatically be ceded 100% to PLIC. That is, PNL will not retain any reserves associated with the business it writes. Additionally, PFG has stated that it will maintain capital and surplus within PNL in an amount that meets or exceeds the requirements necessary to maintain certificates of authority in the 49 states where it is licensed.


For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.

A.M. Best Co.

Analysts

Andrew Edelsberg, 908-439-2200, ext. 5182

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Thomas Rosendale, 908-439-2200, ext. 5201

thomas.rosendale@ambest.com

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Public Relations

Jim Peavy, 908-439-2200, ext. 5644

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Rachelle Morrow, 908-439-2200, ext. 5378

rachelle.morrow@ambest.com



Source: A.M. Best Co.