A.M. Best Co. has commented that the financial strength, issuer credit and debt ratings of Principal Financial Group, Inc. (PFG) (headquartered in Des Moines, IA) [NYSE: PFG] and its subsidiaries are unchanged following the recent announcement that it has signed a definitive agreement to acquire AFP Cuprum S.A. (Cuprum) (Chile) for approximately $1.5 billion. The sale is expected to close in the first quarter of 2013, subject to regulatory approvals. The outlook for all ratings is stable.

PFG intends to pay for the acquisition with a combination of the proceeds from its recent debt offerings, the issuance of new debt and available holding company cash. A.M. Best notes that the transaction is expected to increase PFG's financial leverage due to the anticipated amount of new debt that will need to be issued to help finance the acquisition. While the amount of excess capital would diminish, A.M. Best does not believe it will meaningfully alter the holding company's financial flexibility. The acquisition of Cuprum is consistent with PFG's international growth strategy, which includes the expansion of its strategically core defined contribution pension, voluntary pension and asset accumulation products. A.M. Best expects that the acquisition will have limited impact on the financial strength, capitalization, liquidity and business profile of PFG's operating companies and is anticipated to be immediately accretive to the organization's overall operating earnings. The transaction remains subject to regulatory approval and execution risk, which A.M. Best will continue to monitor as part of its overall rating assessment process.

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
Senior Financial Analyst
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Thomas Rosendale
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Jim Peavy
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