AM Best Affirms Credit Ratings of Principal Financial Group, Inc. and Its Subsidiaries

AM Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of “aa” (Superior) of Principal Life Insurance Company and Principal National Life Insurance Company. Both are life insurance operating companies of Principal Financial Group, Inc. (PFG) [NASDAQ: PFG] and collectively referred to as Principal. Concurrently, AM Best has affirmed the Long-Term ICRs of “a” (Excellent) of Principal Financial Services, Inc. and PFG, as well as the group’s Long-Term Issue Credit Ratings (Long-Term IRs). In addition, AM Best also has affirmed the group’s Short-Term Issue Credit Rating (Short-Term IR). The outlook of these Credit Ratings (ratings) is stable. (Please see below for a detailed listing of the Long- and Short-Term IRs.) All companies are headquartered in Des Moines, IA.

The ratings reflect Principal’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, favorable business profile and very strong enterprise risk management.

AM Best views Principal’s risk-adjusted capitalization as strong, as measured by Best’s Capital Adequacy Ratio (BCAR), although capital growth has been limited by dividends to the parent company. The company lowered its product risk with reinsurance in 2022, ceding its in-force retail fixed annuity and universal life insurance with secondary guarantee (ULSG) blocks. The balance sheet strength assessment also benefits from historically favorable financial flexibility, liquidity profiles and significant excess capital and access to capital markets at the holding company level. AM Best’s favorable view of the company’s capital is somewhat offset by Principal’s higher allocations to commercial mortgages in comparison with the group’s peers and usage of its captive reinsurers.

The company has consistently reported favorable profitability metrics, benefiting from its diverse lines of business, distribution channels and leading market positions. An increasing presence internationally provides additional earnings diversity. However, AM Best notes that political and macroeconomic risks in Principal’s key international markets could have negative effects on the holding company going forward.

Principal has demonstrated strong risk management capabilities through continued enhancements to its risk modeling and stress-testing capabilities to support its overall business strategy, which have driven recent major business decisions.

The following Long-Term IRs have been affirmed with a stable outlook:

Principal Financial Group, Inc. –

— “a” (Excellent) on $400 million 3.40% senior unsecured notes, due 2025

— “a” (Excellent) on $350 million 3.1% senior unsecured notes, due 2026

— “a” (Excellent) on $500 million 3.70% senior unsecured notes, due 2029

— “a” (Excellent) on $600 million 2.125% senior secured notes, due 2030

— “a” (Excellent) on $505.6 million 6.05% senior unsecured notes, due 2036

— “a” (Excellent) on $400 million 5.375% senior unsecured notes, due 2033

— “a” (Excellent) on $300 million 4.625% senior unsecured notes, due 2042

— “a” (Excellent) on $300 million 4.35% senior unsecured notes, due 2043

— “a” (Excellent) on $300 million 4.30% senior unsecured notes, due 2046

— “a” (Excellent) on $300 million 5.5% senior unsecured notes, due 2053

Principal Life Global Funding I— “aa” (Superior) on program rating

— “aa” (Superior) on all outstanding notes issued under the program

Principal Life Global Funding II— “aa” (Superior) on program rating

— “aa” (Superior) on all outstanding notes issued under the program

Principal Financial Global Funding, LLC— “aa” (Superior) on program rating

— “aa” (Superior) on all outstanding notes issued under the program

Principal Financial Global Funding II LLC— “aa” (Superior) on program rating

Principal Life Income Funding Trusts— “aa” (Superior) on program rating

The following Short-Term IR has been affirmed:

Principal Life Insurance Company—

— AMB-1+ (Strongest) commercial paper rating

The following indicative Long-Term IRs on securities available under universal shelf registration have been affirmed with a stable outlook:

Principal Financial Group, Inc.—

— “a” (Excellent) on senior unsecured debt

— “a-” (Excellent) on subordinated debt

— “bbb+” (Good) on preferred stock

Principal Capital I, II and III—

— “aa” (Superior) on preferred securities

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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