CORRECTED - CORRECTED-UPDATE 1-Principal Financial plans 42.3 mln offering

(Corrects paragraph 3 and 5 to remove references to Prudential Financial Inc)

* Proposes to offer 42.3 mln common shares

* Offering could be valued at $1 billion

May 11 (Reuters) - Principal Financial Group Inc (PFG.N), a U.S. life and health insurer battered by investment losses, said it plans to offer 42.3 million common shares, in an effort to bolster its capital position.

Based on Principal's Friday closing price of $23.68, the offering is valued at more than $1 billion.

The company had in November last year applied to borrow up to $2 billion through a federal lending program that is part of the financial industry bailout.

Insurers have been under pressure to raise capital and maintain their credit ratings after their investments lost value amid the credit crisis.

Principal said it plans to use the net proceeds from the offering for general corporate purposes.

The underwriters will have a 30-day option to purchase 6.3 million shares representing an additional 15 percent of the offering to cover overallotments, if any, the company said.

Merrill Lynch & Co is the sole book-running manager for the offering, it added. (Reporting by Supantha Mukherjee in Bangalore, Editing by Dinesh Nair)