Moody's affirms Principal Life

Moody's Investors Service said it affirmed Principal Life Insurance Co.'s surplus notes at A1; the senior secured debt of Principal Income Fundings Trusts, Principal Global Funding LLC, Principal Global Funding I and Principal Global Funding II, LLC at Aa2; Principal Financial Services, Inc.'s short-term rating for commercial paper at Prime-1; Principal Financial Group Australia (Pty.) Ltd.'s guaranteed senior debt at A2; and Principal Financial Group, Inc.'s guaranteed senior unsecured debt at A2.

The outlook is stable.

The rating action follows Principal Financial Group's recent announcement of its third-quarter results, including net income of $90 million, compared with $232 million in the same quarter of 2007, due largely to financial sector asset losses.

Moody's said that the affirmation was based on Principal Life's strong, broad-based position in the U.S. markets for group pensions, good asset quality, conservative asset-liability management and strong capital adequacy.

The agency added that Principal Life does face earnings challenges given its substantial exposure to the equity market through its largely fee-based pension, individual annuity and asset management businesses.

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