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Insurance ratings actions: Fitch, S&P affirm Principal Financial after deal news

S&P Global Market Intelligence compiles ratings actions in the insurance space daily through 5 p.m. ET. Actions after 5 p.m. ET will be included in the following day's roundup.

U.S. and Canada

Fitch Ratings affirmed the long-term issuer default rating of A of Principal Financial Group Inc. and the insurer financial strength ratings of AA- of the company's U.S. operating subsidiaries, Principal Life Insurance Co. and Principal National Life Insurance Co. It also affirmed the long-term issuer default rating of A of Principal Financial Services Inc. The outlook is stable.

The ratings action comes after Principal Financial Group's announcement that it is acquiring Wells Fargo's institutional retirement and trust business for about $1.2 billion.

The ratings affirmation considers Fitch's anticipation that Principal Financial Group will keep its very strong capitalization and financial metrics at levels consistent with current rating expectations. The acquisition of the business is in line with Principal Financial Group's strategy of sustaining a strong market position among small and midsize businesses in the retirement market, according to the rating agency.

Principal Financial Group's rating still considers the company's very strong and stable operating profitability and very strong business profile, assisted by a strong market position and significant operating scale, according to Fitch.

S&P Global Ratings also affirmed the A+ long-term issuer credit ratings and financial strength ratings of Principal Life and Principal National Life. Also, the rating agency affirmed the A- issuer credit ratings of Principal Financial Group and Principal Financial Services.

The outlook is stable, considering S&P Global Ratings' projection that Principal Financial Group will maintain its very strong business risk profile and at least an upper adequate financial risk profile.

The financial strength rating of Principal Life and Principal National Life takes into consideration the group's track record of reporting strong earnings results from diversified product lines and keeping capital at or near the BBB level per S&P Global Ratings' risk-based capital model, the rating agency said.

Principal Financial Group will become a top-five player in the U.S. group pension business with its acquisition of Wells Fargo's institutional retirement and trust business, according to S&P Global Ratings.

Europe

S&P Global Ratings affirmed the long-term issuer credit rating and insurer financial strength rating of A+ of Estonia-based If P&C Insurance AS, the core operating entity of Finland's Sampo group. Also, the issuer credit ratings of A- of Sampo PLC and If P&C Insurance Holding Ltd. were affirmed.

The outlook is stable, reflecting S&P Global Ratings' view that Sampo and its core operating units will maintain their solid competitive position in the Nordic countries throughout the next 12 to 24 months.

The ratings consider S&P Global Ratings' view that Sampo Group can hold out against market volatility, including the effects on regulatory solvency ratio, due to its excellent underwriting performance and earnings generation. The rating agency believes that its current assessment of capital and earnings and risk position takes into account the risks that might affect risk-based capital adequacy.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.

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