Moody's downgrades Principal

Moody's Investors Service said it downgraded Principal Financial Group, Inc.'s senior debt to Baa1 from A3 and preferred stock to Ba1(hyb) from Baa3 (hyb), Principal Financial Services, Inc.'s issuer rating to Baa1 from A3, Principal Life Insurance Co.'s surplus notes to A3(hyb) from A2(hyb) and Principal Financial Global Funding, LLC's backed senior secured debt to A1 from Aa3. The outlook is stable.

The agency said the downgrade was driven by the combined impact of the growth of Principal's weaker (i.e., relative to the insurance operations) non-insurance operations and by profitability pressures on Principal Life. In particular, Moody's noted the weaker intrinsic standalone credit profiles of Principal International, its international pension and asset management operations, and of Principal Global Investors, its third-party institutional fund and asset management operation.

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