Principal's Filing Omits Language on Redemptions (Update1)

By Andrew Frye and Linda Shen
Bloomberg News
May 7, 2009


May 7 (Bloomberg) -- Principal Financial Group Inc. omitted a passage from its quarterly filing that three months ago cast doubt on the life insurer's ability to meet client demands for redemptions.

Principal told investors in its February annual report it may not have the funds to satisfy all customers wishing to redeem their policies if financial market disruptions continue. That passage wasn't included in the Des Moines, Iowa-based company's quarterly report yesterday.

Susan Houser, a spokeswoman for Principal, said the language wasn't included because it was already in the annual report, which requires more detailed disclosure, and there was no change in status to report.

Principal, which was downgraded twice by Standard & Poor's this year, may be on more solid footing after a two-month rally in equity markets reduced pressure on investments and improved the outlook for raising capital. Principal said May 4 that book value per share at the end of March was higher than three months earlier, the first increase in the measure of assets minus liabilities in eight quarters, according to Bloomberg data.

Principal slipped $1.18, or 5.1 percent, to $22.11 at 11:09 a.m. in New York Stock Exchange composite trading. The stock has surged about 43 percent this week, and more than tripled from a low of $5.88 on March 9.

Principal reiterated in yesterday's filing that it may turn to "strategic" investors as it considers "any and all options" to increase capital.

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