Principal Financial nixes federal cash infusion

The Principal Financial Group has declined to participate in the U.S. Treasury’s Capital Purchase Program. On May 15, the Des Moines, Iowa-based insurer received clearance to take advantage of the program, a component of the Department of the Treasury’s Troubled Asset Relief Program, along with five other insurers. Yesterday, Principal chief executive Larry Zimpleman cited the company’s strengthened financial position, along with the improving credit and financial systems, for opting out of federal aid. “We applied for the program in November 2008, when credit markets were inactive,” he said in a statement. “CPP was intended to boost capital among healthy banks and insurance companies to encourage lending, but the economic conditions have now changed.” Aside from the improvement in capital markets, the company recently took steps to bolster its capital by issuing a $1.15 billion secondary equity offering and a $750 million debt offering. All but two of the TARP carriers have decided to pass on the federal government’s help: Ameriprise Financial Inc. of Minneapolis; Prudential Financial Inc. of Newark, N.J.; Allstate Corp. of Northbrook, Ill.; as well as Principal Financial. The Hartford (Conn.) Financial Services Group Inc. yesterday said it would participate in CPP. That carrier received preliminary approval for $3.4 billion in aid. Lincoln National Corp. of Radnor, Pa., has also received preliminary approval for $2.5 billion, but has not yet indicated whether it would take the aid.