| UNITED STATES |
| SECURITIES AND EXCHANGE COMMISSION |
| Washington, D.C. 20549 |
| FORM 8-K |
| CURRENT REPORT |
| Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934 |
| Date of Report (Date of earliest event reported): September 30, 2010 |
| PRINCIPAL FINANCIAL GROUP, INC. |
| (Exact name of registrant as specified in its charter) |
| Delaware | 1-16725 | 42-1520346 |
| (State or other jurisdiction of | (Commission File Number) | (IRS Employer Identification No.) |
| incorporation) |
| 711 High Street, Des Moines, Iowa 50392 |
| (Address of principal executive offices) |
| (515) 247-5111 |
| (Registrant’s telephone number, including area code) |
| Not applicable |
| (Former name or former address, if changed since last report.) |
| Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of |
| the registrant under any of the following provisions (see General Instruction A.2. below): |
| [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 8.01 Other Events. | ||
| On September 30, 2010, Principal Financial Group, Inc., a Delaware corporation (the | ||
| “Company”), issued a press release announcing that the Company will exit the medical insurance | ||
| business within the next thirty-six (36) months. A copy of the press release, dated September 30, | ||
| 2010, is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by | ||
| reference. | ||
| Item 9.01. Financial Statements and Exhibits | ||
| (d) | Exhibits. The following exhibits are being filed herewith: | |
| Exhibit | Description | |
| No. | ||
| 99.1 | Principal Financial Group, Inc. press release dated September 30, 2010. | |
| SIGNATURE | ||
| Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has | ||
| duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. | ||
| PRINCIPAL FINANCIAL GROUP, INC. | ||
| Date: September 30, 2010 | By: /s/ Terrance J. Lillis | |
| Name: Terrance J. Lillis | ||
| Title: Senior Vice President and Chief | ||
| Financial Officer | ||
| EXHIBIT 99.1 | ||
| RELEASE: | On receipt, Sept. 30, 2010 | |
| MEDIA CONTACT: Susan Houser, 515.248.2268, houser.susan@principal.com | ||
| INVESTOR CONTACT: John Egan, 515.235.9500, egan.john@principal.com | ||
| The Principal Financial Group to Exit Medical Insurance Business |
| Agreement with UnitedHealthcare to renew medical insurance coverage for customers |
| (Des Moines, Iowa) – Principal Financial Group, Inc. (NYSE: PFG) today announced the company will |
| exit the medical insurance business (insured and self-insured) and has entered into an agreement with |
| UnitedHealthcare, a UnitedHealth Group Company (NYSE: UNH), to renew medical insurance coverage |
| for customers of The Principal® as the business transitions within the next 36 months. The decision does |
| not impact other businesses including retirement, asset management, life insurance, wellness, disability, |
| dental and vision. |
| Larry D. Zimpleman, chairman, president and chief executive officer, said, “While a difficult |
| decision, this is the right strategic decision for The Principal. While performing well financially, our |
| medical business has been declining in relative size for a number of years, thanks to strong growth from |
| our retirement and asset management businesses. The medical business continues to be one that |
| undergoes rapid change, which would mean investing additional capital into the business to be able to |
| offer competitive products. For us, that just does not make sense.” |
| According to Dan Houston, president – Retirement, Insurance & Financial Services, |
| “UnitedHealthcare provides a broad range of coverage options to meet customers’ needs. By working |
| with UnitedHealthcare, a proven leader and long-term player in the business with an extensive local and |
| national network, we will ensure a smooth transition for customers and brokers.” |
| Sales will cease and the renewal process with UnitedHealthcare will begin immediately to be |
| completed within 36 months, subject to applicable requirements of federal and state law. Employees will |
| be needed throughout that period to continue to serve customers during the transition. As the business |
| transfers, positions will be eliminated. As much as possible the company will place qualified employees |
| in open positions that become available through attrition and growth in other businesses, Houston said. |
| There are approximately 1,500 employees in the medical insurance area. Initially, approximately 150 (of |
| the 1,500) positions will be impacted as some functions cease more quickly. Impacted employees will be |
| considered for other positions and will be given severance and outplacement assistance if they are unable |
| to find a position within the company. |
| “By making this decision, we are positioned to focus our capital and our resources on the |
| strategic opportunities in the asset accumulation and asset management businesses, both domestically and |
| internationally,” Zimpleman said. “And it allows us to continue the growth in our risk businesses, which |
| is important to our overall diversification as well as maintaining our leadership among small- and |
| medium-sized businesses.” |
| The Principal estimates this action will negatively impact third quarter 2010 EPS operating |
| results by $0.03-$0.04 and full-year 2010 EPS operating results by $0.18-$0.20 due to the exclusion of |
| the business from operating earnings. However, the company expects to release between $100 million |
| and $120 million of capital (which primarily reflects the capital allocated to the medical insurance |
| business less a reduction in the diversification benefit that will result from the exit of this business) over |
| the next 36 months as a result of this change. |
| About the Principal Financial Group |
| The Principal Financial GroupÒ (The Principal ® )1 is a leader in offering businesses, individuals and |
| institutional clients a wide range of financial products and services, including retirement and investment |
| services, life and health insurance, and banking through its diverse family of financial services |
| companies. A member of the Fortune 500, the Principal Financial Group has $284.7 billion in assets |
| under management2 and serves some 18.9 million customers worldwide from offices in Asia, Australia, |
| Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York |
| Stock Exchange under the ticker symbol PFG. For more information, visit www.principal.com. For more |
| news and insights from The Principal, connect with us on Twitter at: http://twitter.com/ThePrincipal. |
| Forward looking and cautionary statements |
| This press release contains forward-looking statements, including, without limitation, statements as to |
| operating earnings, net income available to common stockholders, net cash flows, realized and unrealized |
| losses, capital and liquidity positions, sales and earnings trends, and management's beliefs, expectations, goals |
| and opinions. The company does not undertake to update or revise these statements, which are based on a |
| number of assumptions concerning future conditions that may ultimately prove to be inaccurate. Future events |
| and their effects on the company may not be those anticipated, and actual results may differ materially from |
| the results anticipated in these forward-looking statements. The risks, uncertainties and factors that could cause |
| or contribute to such material differences are discussed in the company's annual report on Form 10-K for the |
| year ended December 31, 2009, and in the company’s quarterly report on Form 10-Q for the quarter ended |
| June 30, 2010, filed by the company with the Securities and Exchange Commission, as updated or |
| supplemented from time to time in subsequent filings. These risks and uncertainties include, without |
| limitation: adverse capital and credit market conditions that may significantly affect the company’s ability to |
| meet liquidity needs, access to capital and cost of capital; a continuation of difficult conditions in the global |
| capital markets and the general economy that may materially adversely affect the company’s business and |
| results of operations; the actions of the U.S. government, Federal Reserve and other governmental and |
| regulatory bodies for purposes of stabilizing the financial markets might not achieve the intended effect; the |
| risk from acquiring new businesses, which could result in the impairment of goodwill and/or intangible assets |
| recognized at the time of acquisition; impairment of other financial institutions that could adversely affect the |
| company; investment risks which may diminish the value of the company’s invested assets and the investment |
| returns credited to customers, which could reduce sales, revenues, assets under management and net income; |
| requirements to post collateral or make payments related to declines in market value of specified assets may |
| _________________________ |
| 1 "The Principal Financial Group" and “The Principal” are registered service marks of Principal Financial Services, Inc., a member of the |
| Principal Financial Group. |
| 2 As of June 30, 2010. |
| adversely affect company liquidity and expose the company to counterparty credit risk; changes in laws, |
| regulations or accounting standards that may reduce company profitability; fluctuations in foreign currency |
| exchange rates that could reduce company profitability; Principal Financial Group, Inc.’s primary reliance, as a |
| holding company, on dividends from its subsidiaries to meet debt payment obligations and regulatory |
| restrictions on the ability of subsidiaries to pay such dividends; competitive factors; volatility of financial |
| markets; decrease in ratings; interest rate changes; inability to attract and retain sales representatives; |
| international business risks; a pandemic, terrorist attack or other catastrophic event; and default of the |
| company’s re-insurers. |
| ### |