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Principal Financial Receives Rating Action from A. M. Best


Principal Financial Group, Inc.’s PFG senior unsecured debt recently received indicative Long-Term Issue Credit Ratings of “a-” from A.M. Best. The rating agency also assigned Long-Term Issue Credit Ratings of “bbb+” to the subordinated debt and “bbb” to preferred shares. The outlook for the ratings was stable.

The ratings came on the back of the company’s diverse products and distribution channels, sustained improvement in operating results, impressive business profile, solid risk-adjusted capitalization and strong balance sheet. However, exposure to higher risk assets (real-estate related assets and lower-rated bonds) and exposure to political and financial risk in countries where it has business are headwinds.

Rating affirmations or upgrades from credit rating agencies play an important part in retaining investor confidence on the stock as well as maintaining credit worthiness in the market. Therefore, rating downgrades adversely affect the business as well as increase the costs of future debt issuances. We believe that strong ratings will help Principal Financial retain investor confidence and help it write more businesses going forward.

Shares of Principal Financial gained 10.58% year to date, significantly outperforming the Zacks categorized Investment Management industry’s increase of 6.35%. We believe deeper focus on fee-based revenues, steadily increasing asset under management, impressive inorganic growth story, and a strong balance sheet will continue to drive the stock higher in the future.

Principal Financial carries Zacks Rank #2 (Buy).

Stocks that Warrant a Look

Investors interested in investment managers can also consider AllianceBernstein Holding L.P. AB, Federated Investors Inc. FII, and Lazard Ltd LAZ.

AllianceBernstein provides services to investment companies, pension and profit sharing plans, banks and thrift institutions, trusts, estates, government agencies, charitable organizations, individuals, corporations, and other business entities. The company had a positive average earnings surprise of 9.33% in the last four quarters. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Federated Investors is one of the major investment managers in the United States. The company had a positive average earnings surprise of 5.71% in the last four quarters. The company sports a Zacks Rank #1.

Lazard operates as a financial advisory and asset management firm worldwide. The company had a positive average earnings surprise of 7.85% in the last four quarter. The company holds a Zacks Rank #2.

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