Despite the debt issuances in support of its recent acquisition, A.M. Best views the organization’s adjusted financial leverage (excluding non-recourse debt) of roughly 23%, which incorporates considerable equity credit for the company’s outstanding perpetual preferreds per A.M. Best’s hybrid methodology, as being relatively conservative in comparison to its similarly rated peers. PFG’s leverage ratios, as well as its interest coverage ratio of roughly seven times, remain well within A.M. Best’s guidelines for its current ratings.Offsetting these positive rating factors are PFG's exposure to equity market risk given the growth in its fee-based businesses, its exposure to country risk due to the rapid expansion of its international operations and the sizeable amounts of capital it deployed in recent years. Additionally, A.M. Best is concerned with the negative impact an extended period of low interest rates could have on Principal Life's spread business and net investment income.
A.M. Best Affirms Ratings Of Principal Financial Group, Inc. And Its Subsidiaries
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