TEXT-S&P rates Principal Life Insurance Co

Overview
-- We are assigning our 'A-1' commercial paper (CP) rating to Principal
Life Insurance Co.'s new CP program, and affirming our 'A-2' rating on
Principal Financial Services Inc.'s revised CP program.
-- The ratings on Principal Financial Group and its subsidiaries remain
unchanged.

Rating Action
On May 8, 2012, Standard & Poor's Ratings Services assigned its 'A-1'
commercial paper (CP) rating to Des Moines, Iowa-based Principal Life
Insurance Co.'s new CP program, and affirmed its 'A-2' CP rating on Principal
Financial Services, Inc.'s revised CP program.

Rationale
Principal Financial Services and Principal Life Insurance each have a CP
program with a face amount of $1.0 billion. Total borrowings under these two
CP programs are limited to $800 million: Principal Life Insurance has a
sub-limit of up to $800 million; Principal Financial Services has a sub-limit
of up to $500 million. This replaces the $579 million limit that was in place
for Principal Financial Services. Program documentation is in place to
increase the CP program limit to $1.0 billion overall if the back-up credit
facilities are increased to a like amount.

The CP facilities will be supported, dollar for dollar, by $800 million in
credit facilities from a syndicate of 18 banks. The line of credit is made up
of a $500 million four-year credit agreement, and a $300 million 364-day
credit agreement. The existing five-year syndicated bank line of credit
agreement that supports the old CP program has been replaced by the new credit
facilities. All debts outstanding on the credit facilities are due and payable
at term maturity unless the credit facilities are extended. The average
Standard & Poor's rating on the banks within the syndicate is 'A+', and the
ratings on the banks within the syndicate range from 'BBB+' to 'AA'. The bank
credit facilities can be drawn on directly or used to back CP issuances.

There are no material adverse change clauses within the credit agreements. The
terms and conditions include a maximum total debt to total capital ratio
(excluding other comprehensive income) of 35%, and a minimum net worth of $6.4
billion for Principal Financial Group, Inc. As of December 2011, the total
debt to total capital ratio was 13.5% and the firm's net worth was $10.6
billion.

The CP will rank equally with all existing and future unsecured and
unsubordinated indebtedness of the issuing entity. Principal Financial
Services is an intermediary holding company, and Principal Life Insurance is
the lead U.S. operating company. Principal Financial Group is the top holding
company.

Proceeds from the CP program are expected to be used for general operating
purposes. While the revised CP program does provide the group with slightly
more borrowing capacity, it is neutral to our view of the capital adequacy
position of Principal Life Insurance, given it is short term in nature.

The ratings on Principal Financial Group reflect our assessment of the group's
strong competitive position in the U.S. small-to-midsize group pension market,
and its position in individual and group life and health markets. Principal
Financial has been successfully building out a number of beach-heads into fast
growing international retirement and asset management markets with operations
in 15 countries. Standard & Poor's believes that the group will continue to
maintain its strong business franchise, operating earnings, and solid
operating company liquidity profile. We also consider the quality of Principal
Financial's enterprise risk management to be strong.

Outlook
The positive outlook reflects our expectations that Principal Life's capital
deficit as implied by our capital model will diminish to a level supportive of
a higher rating. A positive outlook indicates that there is more than a
one-in-three chance of an upgrade, over a 24-month horizon from when the
positive outlook was originally assigned. We could revise the outlook to
stable if the holding company deploys its excess cash aggressively and/or
significantly reduces its cash position below current levels, if Principal
Life's generally accepted accounting principles EBIT and fixed charge coverage
fall below $1,050 million and 6x, respectively, in 2012; asset quality
deteriorates greater than expected; or if Principal Life's capital adequacy
falls below expectations as measured by our capital model.

Related Criteria And Research
-- Life Insurance Criteria: Liquidity, April 22, 2004
-- Evaluating Liquidity Triggers In Insurance Enterprises, Nov. 11, 2008
-- Holding Company Analysis, June 11, 2009
-- Interactive Ratings Methodology, April 22, 2009
-- Refined Methodology And Assumptions For Analyzing Insurer Capital
Adequacy Using The Risk-Based Insurance Capital Model, June 7, 2010
-- Principles Of Credit Ratings, Feb. 16, 2011

Ratings List

Rating Assigned

Principal Life Insurance Co.
Commercial Paper A-1

Ratings Affirmed

Principal Financial Services Inc.
Commercial paper A-2

Ratings Unchanged
Principal Financial Group, Inc.
Counterparty credit rating BBB/Positive
Senior unsecured BBB
Preferred stock BB

Principal Financial Services Inc.
Counterparty credit rating BBB/Positive/A-2
Senior unsecured BBB
Commercial paper A-2

Principal Life Insurance Co.
Counterparty credit/Financial strength A/Positive/A-1
Subordinated/surplus note BBB+

Principal Financial Global Funding, LLC
Principal Life Income Fundings Trusts
Principal Life Global Funding I
Principal Financial Global Funding II, LLC
Senior secured A