TEXT-Fitch rates Principal Financial Group unsecured notes 'A-'

Tue Nov 13, 2012 4:20pm EST

Nov 13 - Fitch Ratings has assigned an 'A-' rating to Principal Financial
Group, Inc.'s (PFG) proposed issuance of approximately $800 million of
senior unsecured notes. PFG's long-term Issuer Default Rating is unaffected by
this rating action. 

Fitch placed the ratings of PFG and its insurance operating subsidiaries on 
Rating Watch Negative on Oct. 9, 2012, following the company's announcement that
it would acquire AFP Cuprum S.A. (Cuprum), a Chilean pension manager, for 
consideration of approximately $1.5 billion. The Rating Watch reflects Fitch's 
view that financing of the transaction will bring PFG's financial leverage and 
coverage to levels near previously articulated downgrade triggers. The notes 
being rated today are being issued to fund this acquisition.

The notes are guaranteed by PFG's intermediate holding company, Principal 
Financial Services, Inc., of which the organization's primary operating 
companies are wholly owned subsidiaries. This includes Principal Life Insurance 
Company, PFG's largest insurance operating subsidiary and the source of the vast
majority of the overall organization's operating cash flow.

Following issuance of the notes and near-term refinancing activities, Fitch 
expects PFG's financial leverage ratio to settle at a level slightly below 
Fitch's rating trigger of 25%. The company's financial leverage was 
approximately 21% at Sept. 30, 2012.

PFG, headquartered in Des Moines, IA, markets a range of retirement savings, 
investment and insurance products and services primarily in the small- to 
medium-sized business segment. PFG reported consolidated assets of $159 billion,
and total shareholders' equity of $9.8 billion at Sept. 30, 2012.

Fitch has assigned the following rating:

Principal Financial Group, Inc.
--New senior unsecured notes 'A-'.
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