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AM Best Revises Issuer Credit Rating Outlook to Positive for Principal Financial Group, Inc. and Its Subsidiaries

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AM Best has revised the outlook to positive from stable for the
Long-Term Issuer Credit Ratings (Long-Term ICR) and affirmed the
Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term
Issuer Credit Ratings (Long-Term ICR) of "aa-" 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 are referred to as Principal.
The outlook of the FSR remains stable. Concurrently, AM Best has revised
the outlook to positive from stable and affirmed the Long-Term ICRs of
"a-" of Principal Financial Services, Inc. and PFG, as well as the
group's Long-Term Issue Credit Ratings (Long-Term IR). AM Best also has
affirmed the group's Short-Term Issue Credit Ratings (Short-Term IR).
(Please see below for a detailed listing of the Long- and Short-Term
IRs.) All companies are headquartered in Des Moines, IA.

The Credit Ratings (ratings) reflect Principal's balance sheet strength,
which AM Best categorizes as very strong, as well as its strong
operating performance, favorable business profile and appropriate
enterprise risk management (ERM).

The positive Long-Term ICR outlook for Principal reflects the continued
strength and evolution of the organization's ERM capabilities and the
strength of risk culture and governance that is apparent throughout its
operations. The company has a strongly communicated risk culture across
its organization, with formalized risk appetite statements and
tolerances that are communicated internally and externally. AM Best
expects that risk management practices will continue to evolve
favorably, driven by strategies and innovation apparent throughout the
marketplace. AM Best also expects Principal to further enhance its
demonstrated capabilities going forward.

Principal's balance sheet strength considers the continued level of very
strong risk-adjusted capitalization, which Principal historically has
maintained. Additionally, the ratings reflect the considerable liquidity
and financial flexibility of the life insurance operations and the
organization as a whole. In recent years, operations outside of the
domestic life insurance companies have strengthened the holding
company's ability to provide capital support to the overall operations.
Furthermore, PFG maintains significant holding company cash and
liquidity with favorable interest coverage in excess of 13 times and
financial leverage of just under 20%, as of year-end 2018. The
organization has demonstrated strong management of its diversified
investment portfolio. However, AM Best notes that the life insurance
companies maintain a higher-than--average exposure as compared with the
industry to real-estate related assets, including mortgages,
mortgage-backed securities and lower rated bonds.

The life insurance operations, which reflect diverse product and
distribution capabilities, continue to report strong and consistent
pre-tax operating earnings, with return metrics that have matched or
exceeded industry and peer benchmarks. The company has worked to achieve
notable market share in its core lines of business and has reported
favorable longer-term trends of premium growth in those lines of
business. Additionally, the organization has focused on efficiency and
innovation as a strategy to enhance sales and customer experience.
Principal's strong operating performance and favorable business profile
assessments reflect an organization that has a proven track record of
strong earnings generation and lower volatility of earnings relative to
industry peers while effectively managing expenses. However, due to
increasingly competitive sales and pricing in the market, AM Best feels
the company may experience challenges to sustain favorable trends in
certain core lines of business.

The following Long-Term IRs have been affirmed, with the outlook revised
to positive from stable:

Principal Financial Group, Inc.—
-- "a-" on $300 million 3.30%
senior unsecured notes, due 2022
-- "a-" on $300 million 3.125%
senior unsecured notes, due 2023
-- "a-" on $400 million 3.40%
senior unsecured notes, due 2025
-- "a-" on $505.6 million 6.05%
senior unsecured notes, due 2036
-- "a-" on $300 million 4.625%
senior unsecured notes, due 2042
-- "a-" on $300 million 4.35%
senior unsecured notes, due 2043
--"a-" on $350 million 3.10%
senior unsecured notes, due 2026
--"a-" on $300 million 4.30%
senior unsecured notes, due 2046
-- "bbb+" on $400 million 4.70%
junior subordinated notes, due 2055

Principal Life Global Funding I"aa-" program rating
--
"aa-" on all outstanding notes issued under the program

Principal Life Global Funding II"aa-" program rating
--
"aa-" on all outstanding notes issued under the program

Principal Financial Global Funding, LLC"aa-" program rating
--
"aa-" on all outstanding notes issued under the program

Principal Financial Global Funding II, LLC"aa-" program rating
--
"aa-" on all outstanding notes issued under the program

Principal Life Income Funding Trusts"aa-" program rating
--
"aa-" on all outstanding notes issued under the program

The following Short-Term IR has been affirmed:

Principal Life Insurance Company
-- AMB-1+ commercial paper
rating

The following indicative Long-Term IRs on securities available under
universal shelf registration have been affirmed, with the outlook
revised to positive from stable:

Principal Financial Group, Inc.—
-- "a-" on senior unsecured
debt
-- "bbb+" on subordinated debt
-- "bbb" on preferred stock

Principal Capital I, II and III
-- "bbb" 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
Understanding
Best's Credit Ratings
. For information on the proper media
use of Best's Credit Ratings and AM Best press releases, please view
Guide
for Media - Proper Use of Best's Credit Ratings and AM Best Rating
Action Press Releases
.

AM Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit
www.ambest.com
for more information
.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.

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