A.M. Best has affirmed the financial strength rating of A+ (Superior) the long-term issuer credit ratings of “aa” of Principal Life Insurance Company and Principal National Life Insurance Company.
Both are life insurance operating companies of Principal Financial Group (PFG) and collectively are referred to as Principal.
A.M. Best has also affirmed the long-term issuer credit ratings of “a” of Principal Financial Services, Inc. and PFG, as well as the group’s long-term issue credit ratings.
The outlook of these credit ratings is stable. A.M. Best also has affirmed the group’s short-term issue credit rating.
All companies are headquartered in Des Moines, Ioha.
The ratings reflect Principal’s balance sheet strength, which A.M. Best categorises as very strong, as well as its strong operating performance, favourable business profile and very strong enterprise risk management (ERM).
A.M. Best views Principal’s risk-adjusted capitalisation as strong, although growth in capital has been constrained by dividends to the parent company.
The rating firm says the balance sheet strength also benefits from favourable financial flexibility and liquidity profiles, as well as a high quality investment portfolio.
“This is partially offset by Principal’s higher allocations to commercial mortgages in comparison with the group’s peers and usage of its captive reinsurers,” A.M. Best highlights.
Principal continues to report favourable and stable growth trends and profitability metrics, benefiting from its diverse lines of business, distribution channels and leading market positions. An increasing presence internationally provides additional earnings diversity.
However, A.M. Best notes that political and macroeconomic events in several of its key international markets could have negative effects on the holding company going forward.
A.M. Best suggests that Principal “has demonstrated strong risk management capabilities through continued enhancements to its risk modelling and stress-testing capabilities to support the overall business strategy, continuing to increase coordination between the business units and centralised risk management functions”.
