A.M. Best Co. has assigned debt ratings of "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. PFG's 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. PFG's overall financial leverage is expected to remain below 20%, while interest coverage should remain close to eight times earnings, driven by the company's strong operating earnings profile.

Both ratios are well within A.M. Best's guidelines for its current rating level. The ratings reflect PFG's diverse revenue stream and improved performance within its investment portfolio. The ratings also reflect PFG's 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 PFG's spread-based product lines. Consistent with its peers, A.M. Best will be monitoring the performance of PFG's spread-based products should the challenging operating environment continue for an extended period of time.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

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A.M. Best Co.
Tom Zitelli, 908-439-2200, ext. 5412
Senior Financial Analyst
tom.zitelli@ambest.com
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Thomas Rosendale, 908-439-2200, ext. 5201
Assistant Vice President
thomas.rosendale@ambest.com
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Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
rachelle.morrow@ambest.com
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Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com